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Item 1. Business

2026-03-30 compared with 2025-03-31 · 700 added, 937 removed, 0 unchanged (100% of the section changed)

We are a blank check company

incorporated on April 4, 2024 as a Cayman Islands exempted company and formed for the purpose of effecting a merger, amalgamation, share

exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer

to throughout this Report as our initial business combination.

We have not selected any business combination target and we have not, nor

has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target.

We may pursue an initial business

combination target in any business or industry or at any stage of its corporate evolution.

Our primary focus, however, will be in completing

a business combination with an established business of scale poised for continued growth, led by a highly regarded management team.

management team has an extensive track record of acquiring attractive assets at disciplined valuations, investing in growth while fostering

financial discipline and improving business results.

The 2024 SPAC Rules may materially

affect our ability to complete any potential initial business combination and may increase the costs and time related thereto.

Formation and Initial Public Offering

On April 8, 2024, the Sponsor

made a capital contribution of $25,000, or approximately $0.004 per share, to cover certain of the Company’s expenses, for which

the Company issued 5,750,000 founders shares to the Sponsor.

Up to 750,000 of the founder shares were subject to forfeiture by the Sponsor

for no consideration depending on the extent to which the underwriters’ over-allotment was exercised.

On August 19, 2024, the underwriters

exercised their over-allotment option in full as part of the closing of the Initial Public Offering.

As such, the 750,000 founder shares

are no longer subject to forfeiture.

On August 19, 2024, our Sponsor transferred 25,000

founder shares to each of our three independent directors at their original purchase price.

At December 31, 2024, our Sponsor held 5,675,000

founder shares.

On August 19, 2024, the Company

consummated the initial public offering (“Initial Public Offering”) of 23,000,000 units (the “Units” and, with

respect to the shares of Class A Ordinary Shares included in the Units being offered), which includes the full exercise by the underwriters

of their over-allotment option in the amount of 3,000,000 Units, at $10.00 per Unit, generating gross proceeds of $230,000,000.

Simultaneously with the closing

of the Initial Public Offering, the Company consummated the sale of an aggregate of 6,850,000 Private Placement Warrants at a price of

$1.00 per Private Placement Warrant, in a private placement to the Company’s Sponsor, and Cantor Fitzgerald & Co., the representative

of the underwriters of the Initial Public Offering, generating gross proceeds of $6,850,000.

A total of $231,150,000 ($10.05

per Unit) from the net proceeds of the sale of the United and the sale of the Private Placement Warrants was placed in the trust account

(the “trust account”) maintained by Continental Stock Transfer & Trust Company, acting as trustee.

Our management is pragmatic,

measuring our success in both immediate and continuous financial return balanced across all stakeholders.

Our investment philosophy has

been shaped by the many transactions we have originated, combined with our hands-on experiences as entrepreneurial leaders across the

growth spectrum, from startups to multi-billion-dollar corporations.

We believe in quality management

team s that lead attractive target businesses.

Successful teams understand not only their craft, but the limitations in their businesses,

and realize that efficient scaling requires a consistent onboarding of knowledge, expertise, and varied points of view, as well as capital,

to continue winning the challenge of sustained extraordinary growth.

Unlocking value and growth

potential for our investors, our business combination targets, and ourselves is a balanced multi-part equation crafted through an alignment

of incentives and an incremental injection of value from and across all stakeholders.

We have been and continue to

be entrepreneurs, managers, board members and investors in public and private enterprises that we find exciting.

It is with real knowledge

of the successes and failures of talented and energetic creators that we offer our counsel as partners in seeking to unlock further growth

and value, as well as our support and a matching of intense work ethic, to the managers of businesses we select for combination.

Our Sponsor and Its Affiliates

Our Sponsor, HCM Investor Holdings

II, LLC, is affiliated with Hondius Capital Management, LP.

Hondius Capital Management, LP is an SEC registered investment adviser that

provides discretionary investment advisory services to private fund clients.

The clients include both a hedge fund and separately managed

The principal objective of the funds is to seek superior, risk-adjusted returns investing across borders, currencies and asset

The strategy focuses on the early identification of macroeconomic themes and other large market events.

Notwithstanding our management team’s past

experiences, past performance is not a guarantee (i) that we will be able to identify a suitable candidate for our initial business combination

or (ii) that we will provide an attractive return to our shareholders from any business combination we may consummate.

You should not

rely on the historical record of HCM Investor Holdings, LLC’s and our management’s performance as indicative of our future

Business Operations

As of December 31, 2024, the Company had not commenced

any operations.

All activity through December 31, 2024 relates to the Company’s formation, the Initial Public Offering, which is

described below, and, after the Initial Public Offering, identifying a target company for a business combination.

The Company will not

generate any operating revenues until after the completion of its initial business combination, at the earliest.

The Company will generate

non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering and from changes in the

fair value of its warrant liability

The registration statement for the Company’s

Initial Public Offering was declared effective on August 15, 2024.

On August 19, 2024, the Company consummated the Initial Public Offering

of 23,000,000 units, generating gross proceeds of $230,000,000.

Simultaneously with the closing of the Initial Public

Offering, the Company consummated the sale of 6,850,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant in

a private placement to Sponsor and Cantor Fitzgerald & Co., generating gross proceeds of $6,850,000.

Following the closing of the Initial Public Offering

on August 19, 2024, an amount of $231,150,000 ($10.05 per Unit) from the net proceeds of the sale of the Units and the sale of the Private

Placement Warrants was placed in the trust account with Continental Stock Transfer & Trust Company acting as trustee and invested

government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185

days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the

conditions of Rule 2a-7 of the Investment Company Act, as amended, as determined by the Company, until the earlier of:

(i) the completion

of an initial business combination or (ii) the distribution of the trust account to the Company’s stockholders, as described below.

Transaction costs incurred in connection with the

Initial Public Offering amounted to $15,396,014, consisting of $4,000,000 of underwriting fees, $10,720,000 of deferred underwriting fees

and $676,014 of other offering costs.

The Company’s management has broad discretion

with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants,

although substantially all of the net proceeds are intended to be applied generally toward consummating a business combination.

is no assurance that the Company will be able to complete a business combination successfully.

The Company must complete an initial business

combination having an aggregate fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting

commissions and taxes payable) at the time of the agreement to enter into the initial business combination.

The Company will only complete

a business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target

or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under

the Investment Company Act.

The Company will provide its stockholders with the

opportunity to redeem all or a portion of their Public Shares upon the completion of a business combination either (i) in connection with

a stockholder meeting called to approve the business combination or (ii) by means of a tender offer.

The decision as to whether the Company

will seek stockholder approval of a business combination or conduct a tender offer will be made by the Company, solely in its discretion.

The stockholders will be entitled to redeem their shares for a pro rata portion of the amount then in the trust account (initially $10.05

per share), plus any pro rata interest earned on the funds held in the trust account and not previously released to the Company to pay

its tax obligations.

The per-share amount to be distributed to stockholders who redeem their shares will not be reduced by the deferred

underwriting commissions the Company will pay to the underwriters.

There will be no redemption rights upon the completion of a business

combination with respect to the Company’s warrants.

The Company will proceed with a business combination

only if the Company has net tangible assets of at least $5,000,001 upon such consummation of a business combination unless a stockholder

proposal to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to eliminate the limitation

is approved and, if a majority of the outstanding shares voted are voted in favor of the business combination.

If a stockholder vote is

not required and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant

to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the Securities

and Exchange Commission (“SEC”) and file tender offer documents containing substantially the same information as would be

included in a proxy statement with the SEC prior to completing a business combination.

If the Company seeks stockholder approval in connection

with a business combination, the Company’s Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares

purchased by it during or after the Initial Public Offering in favor of approving a business combination.

Additionally, each public stockholder

may elect to redeem their Public Shares, regardless of whether they vote for or against a business combination.

If the Company seeks stockholder approval of a business

combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Certificate

of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such

stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended

(the “Exchange Act”)), will be restricted from seeking redemption rights with respect to 10% or more of the Public Shares,

without the Company’s prior written consent.

The Sponsor has agreed to (a) waive their redemption

rights with respect to their founder shares and Public Shares in connection with the completion of the initial business combination;

waive their redemption rights with respect to their founder shares and Public Shares in connection with a shareholder vote to approve

an amendment to the Company’s amended and restated memorandum and articles of association;

distributions from the trust account with respect to their founder shares if the Company fails to complete the initial business combination

within the Completion Window, although they will be entitled to liquidating distributions from the trust account with respect to any Public

Shares they hold if the Company fails to complete the initial business combination within the Completion Window and to liquidating distributions

from assets outside the trust account;

and (iv) vote any founder shares held by them and any Public Shares purchased during or after the

Proposed Public Offering (including in open market and privately negotiated transactions, aside from shares they may purchase in compliance

with the requirements of Rule 14e-5 under the Exchange Act, which would not be voted in favor of approving the business combination) in

favor of the initial business combination.

In order to protect the amounts held in the trust

account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or

products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement,

reduce the amount of funds in the trust account to below (1) $10.05 per Public Share or (2) the actual amount per Public Share held in

the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case

net of the interest which may be withdrawn to pay our taxes.

This liability will not apply with respect to any claims by a third party

who executed a waiver of any and all rights to seek access to the trust account and will not apply to any claims under the Company’s

indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act

of 1933, as amended (the “Securities Act”).

Moreover, in the event that an executed waiver is deemed to be unenforceable against

a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims.

The Company will seek to

reduce the possibility that the Sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all

vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or

other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of

any kind in or to monies held in the trust account.

Acquisition Process

In evaluating a prospective

target business, we expect to conduct a due diligence review which may encompass, among other things, meetings with incumbent management

and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as applicable, as well as a review of

financial, operational, legal and other information about the target and its industry which will be made available to us.

If we determine

to move forward with a particular target, we will proceed to structure and negotiate the terms of the business combination transaction.

The time required to select

and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,

are not currently ascertainable with any degree of certainty.

Any costs incurred with respect to the identification and evaluation of,

and negotiation with, a prospective target business with which our initial business combination is not ultimately completed will result

in our incurring losses and will reduce the funds available for us to use to complete another business combination.

Initial Business Combination

Nasdaq rules require that we

must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held

in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account).

Our board of directors will make the determination as to the fair market value of our initial business combination.

If our board of directors

is not able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent

investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such

While we consider it likely that our board of directors will be able to make an independent determination of the fair market

value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular

target or if there is a significant amount of uncertainty as to the value of the target’s assets or prospects.

Additionally, pursuant

to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.

We anticipate structuring our

initial business combination so that the post transaction company in which our public shareholders own shares will own or acquire 100%

of the equity interests or assets of the target business or businesses.

We may, however, structure our initial business combination such

that the post transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet

certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business combination

if the post transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires

a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company

Act of 1940, as amended, or the Investment Company Act.

Even if the post transaction company owns or acquires 50% or more of the voting

securities of the target, our shareholders prior to the business combination may collectively own a minority interest in the post transaction

company, depending on valuations ascribed to the target and us in the business combination.

For example, we could pursue a transaction

in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock, shares or other equity interests

In this case, we would acquire a 100% controlling interest in the target.

However, as a result of the issuance of a substantial

number of new shares, our shareholders immediately prior to our initial business combination could own less than a majority of our issued

and outstanding shares subsequent to our initial business combination.

If less than 100% of the equity interests or assets of a target

business or businesses are owned or acquired by the post transaction company, the portion of such business or businesses that is owned

or acquired is what will be taken into account for purposes of the 80% of net assets test described above.

If the business combination

involves more than one target business, the aggregate value of all of the target businesses, will be taken into account for purposes of

the 80% fair market value test.

We are not prohibited from

pursuing an initial business combination with a company that is affiliated with our Sponsor, officers or directors, non-managing sponsor

investors or completing the business combination through a joint venture or other form of shared ownership with our Sponsor, officers

or directors, or non-managing sponsor investors.

In the event we seek to complete our initial business combination with a company that

is affiliated (as defined in our amended and restated memorandum and articles of association) with our Sponsor, officers or directors,

we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent

entity that commonly renders valuation opinions, stating that the consideration to be paid by us in such an initial business combination

is fair to our company from a financial point of view.

We are not required to obtain such an opinion in any other context.

Members of our management team

and our independent directors directly or indirectly own Class B Ordinary Shares and/or Private Placement Warrants following the Initial

Public Offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate

business with which to effectuate our initial business combination.

Further, each of our officers and directors may have a conflict of

interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors

was included by a target business as a condition to any agreement with respect to our initial business combination.

Each of our officers and directors

presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more

other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such

Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an

entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual

obligations to present such business combination opportunity to such other entity, subject to their fiduciary duties under Cayman Islands

Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by law:

(i) no individual

serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging

directly or indirectly in the same or similar business activities or lines of business as us, and (ii) we renounce any interest or expectancy

in, or in being offered an opportunity to participate in, any potential transaction or matter which (a) may be a corporate opportunity

for any director or officer, on the one hand, and us, on the other or (b) the presentation of which would breach an existing legal obligation

of a director or officer to any other entity.

We do not believe, however, that the fiduciary duties or contractual obligations of our

officers or directors will materially affect our ability to complete our initial business combination.

In addition, our Sponsor and

our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business

or investment ventures during the period in which we are seeking an initial business combination.

As a result, our Sponsor, officers and

directors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other

special purpose acquisition company with which they may become involved.

Any such companies, businesses or investments may present additional

conflicts of interest in pursuing an initial business combination target.

However, we do not believe that any such potential conflicts

would materially affect our ability to complete our initial business combination.

We have filed a Registration

Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as

amended, or the Exchange Act.

As a result, we are subject to the rules and regulations promulgated under the Exchange Act.

current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the

consummation of our initial business combination.

Sourcing of Potential Business Combination Targets

We believe our management team’s

significant operating and transaction experience and relationships will provide us with a substantial number of potential initial business

combination targets.

Over the course of their careers, the members of our management team have developed a broad network of contacts and

corporate relationships around the world.

This network has grown through the activities of our management team sourcing, acquiring and

financing businesses, the reputation of our management team for integrity and fair dealing with sellers, financing sources and target

management teams and the experience of our management team in executing transactions under varying economic and financial market conditions.

This network has provided our

management team with a flow of referrals that has resulted in numerous transactions which were proprietary or where a limited group of

investors were invited to participate in the sale process.

We believe that the network of contacts and relationships of our management

team will provide us important sources of investment opportunities.

In addition, we anticipate that target business combination candidates

will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and

large business enterprises seeking to divest non-core assets or divisions.

We have not contacted any of

the prospective target businesses that our management team in their prior SPACs had considered and rejected as target businesses to acquire.

However, we may contact such targets subsequent to the closing of the Initial Public Offering if we become aware that such targets are

interested in a potential initial business combination with us and such transaction would be attractive to our shareholders.

there is no current basis for investors in the Initial Public Offering to evaluate the possible merits or risks of the target business

with which we may ultimately complete our initial business combination.

We are not prohibited from

pursuing an initial business combination with a company that is affiliated with our Sponsor, officers or directors, non-managing sponsor

investors, or completing the business combination through a joint venture or other form of shared ownership with our Sponsor, officers

or directors or non-managing sponsor investors.

In the event we seek to complete our initial business combination with a company that

is affiliated (as defined in our amended and restated memorandum and articles of association) with our Sponsor, officers or directors,

we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent

entity that commonly renders valuation opinions, stating that the consideration to be paid by us in such an initial business combination

is fair to our company from a financial point of view.

We are not required to obtain such an opinion in any other context.

Members of our management team

and our independent directors directly or indirectly own Class B Ordinary Shares and/or Private Placement Warrants following the Initial

Public Offering and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate

business with which to effectuate our initial business combination.

Further, each of our officers and directors may have a conflict of

interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors

was included by a target business as a condition to any agreement with respect to our initial business combination.

Each of our officers and directors

presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more

other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to such

Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an

entity to which he or she has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual

obligations to present such business combination opportunity to such other entity, subject to their fiduciary duties under Cayman Islands

Our amended and restated memorandum and articles of association provide that, to the fullest extent permitted by law:

(i) no individual

serving as a director or an officer shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging

directly or indirectly in the same or similar business activities or lines of business as us, and (ii) we renounce any interest or expectancy

in, or in being offered an opportunity to participate in, any potential transaction or matter which (a) may be a corporate opportunity

for any director or officer, on the one hand, and us, on the other or (b) the presentation of which would breach an existing legal obligation

of a director or officer to any other entity.

We do not believe, however, that the fiduciary duties or contractual obligations of our

officers or directors will materially affect our ability to complete our initial business combination.

In addition, our Sponsor and

our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business

or investment ventures during the period in which we are seeking an initial business combination.

As a result, our Sponsor, officers and

directors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other

special purpose acquisition company with which they may become involved.

Any such companies, businesses or investments may present additional

conflicts of interest in pursuing an initial business combination target.

However, we do not believe that any such potential conflicts

would materially affect our ability to complete our initial business combination.

Corporate Information

Our executive offices are located at 100 First Stamford

Place, Suite 330 Stamford, CT 06902, and our telephone number is (203) 930-2200.

We are an “emerging growth company,”

as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.

such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public

companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation

requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive

compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote

on executive compensation and stockholder approval of any golden parachute payments not previously approved.

If some investors find our

securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities

may be more volatile.

In addition, Section 107 of the JOBS Act also provides

that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities

Act for complying with new or revised accounting standards.

In other words, an emerging growth company can delay the adoption of certain

accounting standards until those standards would otherwise apply to private companies.

We intend to take advantage of the benefits of

this extended transition period.

We will remain an emerging growth company until

the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of our Initial Public Offering,

(b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer,

which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2)

the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

herein to emerging growth company will have the meaning associated with it in the JOBS Act.

Financial Position

As of December 31, 2024, we had approximately $235,193,585

held in the trust account.

With the funds available, we offer a target business a variety of options such as creating a liquidity event

for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing

its debt or leverage ratio.

Because we are able to complete our initial business combination using our cash, debt or equity securities,

or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the consideration

to be paid to the target business to fit its needs and desires.

However, we have not taken any steps to secure third party financing and

there can be no assurance it will be available to us.

Limited Ability to Evaluate the Target’s Management Team

Although we intend to closely scrutinize the management

of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our

assessment of the target business’ management may not prove to be correct.

In addition, the future management may not have the necessary

skills, qualifications or abilities to manage a public company.

Furthermore, the future role of members of our management

team, if any, in the target business cannot presently be stated with any certainty.

The determination as to whether any of the members

of our management team will remain with the combined company will be made at the time of our initial business combination.

possible that one or more of our directors will remain associated in some capacity with us following our initial business combination,

it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination.

we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of the

particular target business.

We cannot assure you that any of our key personnel

will remain in senior management or advisory positions with the combined company.

The determination as to whether any of our key personnel

will remain with the combined company will be made at the time of our initial business combination.

Following an initial business combination, we may

seek to recruit additional managers to supplement the incumbent management of the target business.

We cannot assure you that we will have

the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary

to enhance the incumbent management.

Shareholders May Not Have the Ability to Approve Our Initial Business

We may conduct redemptions

without a shareholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended and restated memorandum

and articles of association.

However, we will seek shareholder approval if it is required by law or applicable stock exchange rule, or

we may decide to seek shareholder approval for business or other reasons.

Under Nasdaq’s listing

rules, shareholder approval would be required for our initial business combination if, for example:

● We issue ordinary shares that will be equal to or in excess

of 20% of the number of our ordinary shares then outstanding (other than in a public offering);

● Any of our directors, officers or substantial shareholders

(as defined by Nasdaq rules) has a 5% or greater interest earned on the trust account (or such persons collectively have a 10% or greater

interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance

of ordinary shares could result in an increase in outstanding ordinary shares or voting power of 5% or more;

● The issuance or potential issuance of ordinary shares will

result in our undergoing a change of control.

The decision as to whether

we will seek shareholder approval of a proposed business combination in those instances in which shareholder approval is not required

by applicable law or stock exchange listing requirements will be made by us, solely in our discretion, and will be based on business

and legal reasons, which include a variety of factors, including, but not limited to:

(i) the timing of the transaction, including in

the event we determine shareholder approval would require additional time and there is either not enough time to seek shareholder approval

or doing so would place the company at a disadvantage in the transaction or result in other additional burdens on the company;

expected cost of holding a shareholder vote;

(iii) the risk that the shareholders would fail to approve the proposed business combination;

(iv) other time and budget constraints of the company;

and (v) additional legal complexities of a proposed business combination that

would be time-consuming and burdensome to present to shareholders.

Permitted Purchases of our Securities

If we seek stockholder approval of our initial business

combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules,

our Sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase shares or Public Warrants in privately

negotiated transactions or in the open market either prior to or following the completion of our initial business combination.

no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions,

subject to compliance with applicable law and NASDAQ rules.

However, they have no current commitments, plans or intentions to engage in

such transactions and have not formulated any terms or conditions for any such transactions.

If they engage in such transactions, they

will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller or if such

purchases are prohibited by Regulation M under the Exchange Act.

We do not currently anticipate that such purchases, if any, would constitute

a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules

under the Exchange Act;

however, if the purchasers determine at the time of any such purchases that the purchases are subject to such

rules, the purchasers will comply with such rules.

Any such purchases will be reported pursuant to

Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.

None of the funds

held in the trust account will be used to purchase shares or Public Warrants in such transactions prior to completion of our initial business

The purpose of any such purchases of shares could

be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval

of the initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum

net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would

otherwise not be met.

The purpose of any such purchases of Public Warrants could be to reduce the number of Public Warrants outstanding

or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination.

Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been

In addition, if such purchases are made, the public “float” of our shares of common stock or warrants may be reduced

and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation,

listing or trading of our securities on a national securities exchange.

Our Sponsor, officers, directors and/or their affiliates

anticipate that they may identify the stockholders with whom our Sponsor, officers, directors or their affiliates may pursue privately

negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders

following our mailing of proxy materials in connection with our initial business combination.

To the extent that our Sponsor, officers,

directors, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders

who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business

combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination.

officers, directors, advisors or their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange

Act and the other federal securities laws.

Any purchases by our Sponsor, officers, directors

and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the extent such purchases

are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule

10b-5 of the Exchange Act.

Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be

available to the purchaser.

Our Sponsor, officers, directors and/or their affiliates will not make purchases of common stock if the purchases

would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.

Any such purchases will be reported pursuant to Section 13 and Section

16 of the Exchange Act to the extent such purchases are subject to such reporting requirements.

Redemption Rights for Public Stockholders upon Completion of our

Initial Business Combination

We will provide our public shareholders with the

opportunity to redeem, regardless of whether they abstain, vote for, or vote against, our initial business combination, all or a portion

of their Public Shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate

amount then on deposit in the trust account calculated as of two business days prior to the consummation of our initial business combination,

including interest earned on the funds held in the trust account (less taxes payable), divided by the number of then outstanding Public

Shares, subject to the limitations and on the conditions described herein.

The amount in the trust account is initially anticipated to

be $10.05 per public share.

The per share amount we will distribute to investors who properly redeem their shares will not be reduced

by the deferred underwriting commissions we will pay to the underwriters.

There will be no redemption rights upon the completion of our

initial business combination with respect to our warrants.

Our Sponsor, officers and directors have entered into a letter agreement with

us, pursuant to which they have agreed to waive their redemption rights with respect to their Class B Ordinary Shares and any Public Shares

they may have acquired during or after the Initial Public Offering in connection with the completion of our initial business combination.

Manner of Conducting Redemptions

We will provide our public shareholders with the

opportunity to redeem all or a portion of their Class A Ordinary Shares upon the completion of our initial business combination either

(i) in connection with a general meeting called to approve the business combination or (ii) without a shareholder vote by means of a tender

The decision as to whether we will seek shareholder approval of a proposed business combination or conduct a tender offer will

be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the

terms of the transaction would require us to seek shareholder approval under applicable law or stock exchange listing requirement or whether

we were deemed to be a foreign private issuer (which would require a tender offer rather than seeking shareholder approval under SEC rules),

as described above under the heading “Shareholders May Not Have the Ability to Approve Our Initial Business Combination.”

Asset acquisitions and share purchases would not typically require shareholder approval while direct mergers with our company (other than

with a 90% subsidiary of ours) and any transactions where we issue more than 20% of our issued and outstanding ordinary shares or seek

to amend our amended and restated memorandum and articles of association would require shareholder approval.

So long as we obtain and

maintain a listing for our securities on Nasdaq, we will be required to comply with Nasdaq’s shareholder approval rules.

The requirement that we provide our public shareholders

with the opportunity to redeem their Public Shares by one of the two methods listed above are contained in provisions of our amended and

restated memorandum and articles of association and will apply whether or not we maintain our registration under the Exchange Act or our

listing on Nasdaq.

Such provisions may be amended if approved by a special resolution, which requires the affirmative vote of the holders

of a majority of at least two-thirds of the ordinary shares, who, being entitled to do so, vote in person or by proxy at a general meeting

of the company, so long as we offer redemption in connection with such amendment.

If we provide our public shareholders with the opportunity

to redeem their Public Shares in connection with a general meeting, we will, pursuant to our amended and restated memorandum and articles

of association:

● conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the

solicitation of proxies, and not pursuant to the tender offer rules, and

● file proxy materials with the SEC.

In the event that we seek shareholder

approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public shareholders

with the redemption rights described above upon completion of the initial business combination.

If we seek shareholder approval,

we will complete our initial business combination only if we obtain the approval of an ordinary resolution under Cayman Islands law, which

requires the affirmative vote of the holders of a majority of the ordinary shares, who, being entitled to do so, vote in person or by

proxy at a general meeting of the company.

A quorum for such meeting will be present if the holders of at least one third of issued and

outstanding shares entitled to vote at the meeting are represented in person or by proxy.

Our Sponsor, officers and directors will count

toward this quorum and, pursuant to the letter agreement, our Sponsor, officers and directors have agreed to vote their Class B Ordinary

Shares, private placement shares and any Public Shares purchased during or after the Initial Public Offering (including in open market

and privately-negotiated transactions, aside from shares they may purchase in compliance with the requirements of Rule 14e-5 under the

Exchange Act, which would not be voted in favor of approving the business combination transaction) in favor of our initial business combination.

For purposes of seeking approval of an ordinary resolution, non-votes will have no effect on the approval of our initial business combination

once a quorum is obtained.

As a result, in addition to our Initial Shareholders’ Class B Ordinary Shares, we would need 7,500,001,

or 37.5%, of the 20,000,000 Public Shares sold in the Initial Public Offering to be voted in favor of an initial business combination

in order to have our initial business combination approved, assuming all outstanding shares are voted.

Assuming that only the holders

of one-third of our issued and outstanding ordinary shares, representing a quorum under our amended and restated memorandum and articles

of association vote their shares at a general meeting of the company, we will not need any Public Shares in addition to our Class B Ordinary

Shares to be voted in favor of an initial business combination in order to approve an initial business combination.

However, if our initial

business combination is structured as a statutory merger or consolidation with another company under Cayman Islands law, in addition to

obtaining approval of our initial business combination by ordinary resolution, the approval of the statutory merger or consolidation will

require a special resolution under Cayman Islands Law, which requires the affirmative vote of the holders of a majority of at least two-thirds

of the ordinary shares, who, being entitled to do so, vote in person or by proxy at a general meeting of the company.

In addition, prior

to the closing of our initial business combination, only holders of our Class B Ordinary Shares (i) will have the right to appoint and

remove directors prior to or in connection with the completion of our initial business combination and (ii) will be entitled to vote on

continuing our company in a jurisdiction outside the Cayman Islands (including any special resolution required to amend our constitutional

documents or to adopt new constitutional documents, in each case, as a result of our approving a transfer by way of continuation in a

jurisdiction outside the Cayman Islands).

These quorum and voting thresholds, and the voting agreement of our Sponsor, officers and directors,

may make it more likely that we will consummate our initial business combination.

Each public shareholder may elect to redeem their Public

Shares irrespective of whether they vote for or against the proposed transaction, or whether they do not vote or abstain from voting on

the proposed transaction, or whether they were a public shareholder on the record date for the general meeting held to approve the proposed

Limitation on Redemption upon Completion of our Initial Business

Combination if we Seek Stockholder Approval

Notwithstanding the foregoing, if we seek stockholder

approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant

to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any

affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined

under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 10%

of the shares sold in our Initial Public Offering, which we refer to as the “Excess Shares.” Such restriction shall also be

applicable to our affiliates.

We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent

attempts by such holders to use their ability to exercise their redemption rights against a proposed initial business combination as a

means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable

Absent this provision, a public stockholder holding more than an aggregate of 10% of the shares sold in our Initial Public Offering

could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium

to the then-current market price or on other undesirable terms.

By limiting our stockholders’ ability to redeem no more than 10%

of the shares sold in our Initial Public Offering without our prior consent, we believe we will limit the ability of a small group of

stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with

an initial business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount

However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for

or against our initial business combination.

If a shareholder vote is not

required and we do not decide to hold a shareholder vote for business or other legal reasons, we will:

● conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate

issuer tender offers, and

● file tender offer documents with the SEC prior to completing our initial business combination which contain

substantially the same financial and other information about the initial business combination and the redemption rights as is required

under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.

In the event we conduct redemptions

pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)

under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer

In addition, the tender offer will be conditioned on public shareholders not tendering more than the number of Public Shares we

are permitted to redeem.

If public shareholders tender more shares than we have offered to purchase, we will withdraw the tender offer

and not complete the initial business combination.

Upon the public announcement

of our initial business combination, if we elect to conduct redemption pursuant to the tender offer rules, we or our Sponsor will terminate

any plan established in accordance with Rule 10b5-1 to purchase our Class A Ordinary Shares in the open market, in order to comply with

Rule 14e-5 under the Exchange Act.

We intend to require our public

shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”

to, at the holder’s option, either deliver their share certificates to our transfer agent or deliver their shares to our transfer

agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth

in the proxy materials or tender offer documents, as applicable.

In the case of proxy materials, this date may be up to two business days

prior to the scheduled vote on the proposal to approve the initial business combination.

In addition, if we conduct redemptions in connection

with a shareholder vote, we intend to require a public shareholder seeking redemption of its Public Shares to also submit a written request

for redemption to our transfer agent two business days prior to the scheduled vote in which the name of the beneficial owner of such shares

The proxy materials or tender offer documents, as applicable, that we will furnish to holders of our Public Shares in connection

with our initial business combination will indicate whether we are requiring public shareholders to satisfy such delivery requirements.

We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication or

action from the redeeming public shareholders, which could delay redemptions and result in additional administrative cost.

If the proposed

initial business combination is not approved and we continue to search for a target company, we will promptly return any certificates

or shares delivered by public shareholders who elected to redeem their shares.

Our proposed initial business

combination may impose a minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for working

capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions.

In the event the aggregate cash

consideration we would be required to pay for all Class A Ordinary Shares that are validly submitted for redemption plus any amount required

to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available

to us, we will not complete the initial business combination or redeem any shares, and all Class A Ordinary Shares submitted for redemption

will be returned to the holders thereof.

We may, however, raise funds through the issuance of equity or equity-linked securities or through

loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements

or backstop arrangements we may enter into following consummation of the Initial Public Offering, in order to, among other reasons, satisfy

such net tangible assets or minimum cash requirements.

Limitation on Redemption Upon Completion of Our Initial Business

Combination If We Seek Shareholder Approval

If we seek shareholder approval

of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to

the tender offer rules, our amended and restated memorandum and articles of association provide that a public shareholder, together with

any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as

defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares without

our prior consent.

We believe this restriction will discourage shareholders from accumulating large blocks of shares, and subsequent attempts

by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us

or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms.

this provision, a public shareholder holding more than an aggregate of 15% of the shares sold in the Initial Public Offering could threaten

to exercise its redemption rights if such holder’s shares are not purchased by us, our Sponsor or our management at a premium to

the then-current market price or on other undesirable terms.

By limiting our shareholders’ ability to redeem no more than 15% of

the shares sold in the Initial Public Offering without our prior consent, we believe we will limit the ability of a small group of shareholders

to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with a business

combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.

However, we would not be restricting

our shareholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.

Delivering Share Certificates in Connection with the Exercise of

Redemption Rights

As described above, we intend

to require our public shareholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in

“street name,” to, at the holder’s option, either deliver their share certificates to our transfer agent or deliver

their shares to our transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system,

prior to the date set forth in the proxy materials or tender offer documents, as applicable.

In the case of proxy materials, this date

may be up to two business days prior to the scheduled vote on the proposal to approve the initial business combination.

In addition, if

we conduct redemptions in connection with a shareholder vote, we intend to require a public shareholder seeking redemption of its Public

Shares to also submit a written request for redemption to our transfer agent two business days prior to the scheduled vote in which the

name of the beneficial owner of such shares is included.

The proxy materials or tender offer documents, as applicable, that we will furnish

to holders of our Public Shares in connection with our initial business combination will indicate whether we are requiring public shareholders

to satisfy such delivery requirements.

Accordingly, a public shareholder would have up to two business days prior to the scheduled vote

on the initial business combination if we distribute proxy materials, or from the time we send out our tender offer materials until the

close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise its redemption rights.

In the event that a shareholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials, as

applicable, its shares may not be redeemed.

Given the relatively short exercise period, it is advisable for shareholders to use electronic

delivery of their Public Shares.

There is a nominal cost associated

with the above-referenced process and the act of certificating the shares or delivering them through the DWAC system.

The transfer agent

will typically charge the broker submitting or tendering shares a fee of approximately $100 and it would be up to the broker whether or

not to pass this cost on to the redeeming holder.

However, this fee would be

incurred regardless of whether or not we require holders seeking to exercise redemption rights to submit or tender their shares.

to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.

Any request to redeem such

shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials or tender offer documents, as applicable.

Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently

decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return

the certificate (physically or electronically).

It is anticipated that the funds to be distributed to holders of our Public Shares electing

to redeem their shares will be distributed promptly after the completion of our initial business combination.

If our initial business combination

is not approved or completed for any reason, then our public shareholders who elected to exercise their redemption rights would not be

entitled to redeem their shares for the applicable pro rata share of the trust account.

In such case, we will promptly return any certificates

delivered by public holders who elected to redeem their shares.

If our initial proposed business

combination is not completed, we may continue to try to complete a business combination with a different target until the end of the Completion

Redemption of Public Shares and Liquidation if no Initial Business

Our amended and restated memorandum

and articles of association provide that we will have only the duration of the Completion Window to complete our initial business combination.

If we have not completed our initial business combination within such time period, we will (i) cease all operations except for the purpose

of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter (and subject to lawfully available

funds therefor), redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the

trust account, including interest earned on the funds held in the trust account (which interest shall be net of taxes and less up to $100,000

of interest to pay dissolution expenses), divided by the number of then-outstanding Public Shares, which redemption will completely extinguish

public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject

to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders

and our board of directors, liquidate and dissolve, subject in each case to our obligations under Cayman Islands law to provide for claims

of creditors and the requirements of other applicable law.

There will be no redemption rights or liquidating distributions with respect

to our warrants, which will expire worthless if we fail to complete our initial business combination within the Completion Window.

Our Sponsor, officers and

directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from

the trust account with respect to any Class B Ordinary Shares held by them if we fail to complete our initial business combination within

the Completion Window, although they will entitled to liquidating distributions from assets outside the trust account.

However, if our

Sponsor or management team acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions

from the trust account with respect to such Public Shares if we fail to complete our initial business combination within the allotted

Completion Window.

Our Sponsor, officers and

directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated memorandum

and articles of association (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial

business combination or to redeem 100% of our Public Shares if we do not complete our initial business combination within the Completion

Window or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination

activity, in each case unless we provide our public shareholders with the opportunity to redeem their Public Shares upon approval of any

such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest

earned on the funds held in the trust account (less taxes payable), divided by the number of then outstanding Public Shares.

The non-managing

sponsor investors are not required to (i) hold any units, Class A Ordinary Shares or Public Warrants they may purchase in the Initial

Public Offering or thereafter for any amount of time, (ii) vote any Class A Ordinary Shares they may own at the applicable time in favor

of our initial business combination or (iii) refrain from exercising their right to redeem their Public Shares at the time of our initial

business combination.

The non-managing sponsor investors have the same rights to the funds held in the trust account with respect to the

Class A Ordinary Shares underlying the units they may have purchased in the Initial Public Offering as the rights afforded to our other

public shareholders.

However, if the non-managing Sponsor investors purchase all of the units for which they have expressed to us an interest

in purchasing or otherwise hold a substantial number of our units, then the non-managing sponsor investors will potentially have different

interests than our other public shareholders in approving our initial business combination and otherwise exercising their rights as public

shareholders because of their indirect ownership of Class B Ordinary Shares as further discussed in this Report.

We expect that all costs

and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts

remaining out of the approximately $1,000,000 of proceeds held outside the trust account, although we cannot assure you that there

will be sufficient funds for such purpose.

However, if those funds are not sufficient to cover the costs and expenses associated with

implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay income

taxes on interest income earned on the trust account balance, we may request the trustee to release to us an additional amount of up

to $100,000 of such accrued interest to pay those costs and expenses.

If we were to expend all of

the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, other than the proceeds deposited in the

trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received

by shareholders upon our dissolution would be approximately $10.05.

The proceeds deposited in the trust account could, however, become

subject to the claims of our creditors which would have higher priority than the claims of our public shareholders.

We cannot assure you

that the actual per-share redemption amount received by shareholders will not be substantially less than $10.05.

While we intend to pay

such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.

Although we will seek to have

all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us

waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public shareholders,

there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from

bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other

similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect

to a claim against our assets, including the funds held in the trust account.

If any third party refuses to execute an agreement waiving

such claims to the monies held in the trust account, our management will consider whether competitive alternatives are reasonably available

to us and will only enter into an agreement with such third party if management believes that such third party’s engagement would

be in the best interests of the company under the circumstances.

Examples of possible instances where we may engage a third party that

refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management

to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable

to find a service provider willing to execute a waiver.

Withum Smith+Brown, PC, our independent registered public accounting firm, and

the underwriters of the Initial Public Offering will not execute agreements with us waiving such claims to the monies held in the trust

In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result

of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any

In order to protect the amounts held in the trust account, our Sponsor has agreed that it will be liable to us if and to the extent

any claims by a third party for services rendered or products sold to us (except for the Company’s independent auditors), or a prospective

target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination

agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.05 per public share and (ii) the actual amount

per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.05 per share due to

reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third

party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not

such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of the Initial Public Offering against

certain liabilities, including liabilities under the Securities Act.

However, we have not asked our Sponsor to reserve for such indemnification

obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and we believe

that our Sponsor’s only assets are securities of our company.

Therefore, we cannot assure you that our Sponsor would be able to

satisfy those obligations.

As a result, if any such claims were successfully made against the trust account, the funds available for our

initial business combination and redemptions could be reduced to less than $10.05 per public share.

In such event, we may not be able

to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of

your Public Shares.

None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims

by vendors and prospective target businesses.

In the event that the proceeds

in the trust account are reduced below the lesser of (i) $10.05 per public share and (ii) the actual amount per public share held in the

trust account as of the date of the liquidation of the trust account if less than $10.05 per share due to reductions in the value of the

trust assets, in each case less taxes payable, and our Sponsor asserts that it is unable to satisfy its indemnification obligations or

that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal

action against our Sponsor to enforce its indemnification obligations.

While we currently expect that our independent directors would

take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent

directors in exercising their business judgment may choose not to do so in any particular instance if, for example, the cost of such legal

action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine

that a favorable outcome is not likely.

Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share

redemption price will not be less than $10.05 per share.

We will seek to reduce the

possibility that our Sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service

providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,

interest or claim of any kind in or to monies held in the trust account.

Our Sponsor will also not be liable as to any claims under our

indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act.

We will have access to up to approximately $1,150,000 (or $1,000,000 if the overallotment option is exercised in full) from the proceeds

of the Initial Public Offering with which to pay any such potential claims (including costs and expenses incurred in connection with our

liquidation, currently estimated to be no more than approximately $100,000).

In the event that we liquidate and it is subsequently determined

that the reserve for claims and liabilities is insufficient, shareholders who received funds from our trust account could be liable for

claims made by creditors.

If we file a bankruptcy or

winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed, the proceeds held in

the trust account could be subject to applicable bankruptcy or insolvency law, and may be included in our bankruptcy or insolvency estate

and subject to the claims of third parties with priority over the claims of our shareholders.

To the extent any bankruptcy or insolvency

claims deplete the trust account, we cannot assure you we will be able to return $10.05 per share to our public shareholders.

Additionally,

if we file a bankruptcy or winding-up petition or an involuntary bankruptcy or winding-up petition is filed against us that is not dismissed,

any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy or insolvency laws as either

a “preferential transfer” or a “fraudulent conveyance, preference or disposition.” As a result, a liquidator or

bankruptcy or insolvency court could seek to recover some or all amounts received by our shareholders.

Furthermore, our board of directors

may be viewed as having breached its fiduciary duty to us or our creditors and/or may have acted in bad faith, and thereby exposing itself

and our company to claims of punitive damages, by paying public shareholders from the trust account prior to addressing the claims of

We cannot assure you that claims will not be brought against us for these reasons.

Our public shareholders will

be entitled to receive funds from the trust account only (i) in the event of the redemption of our Public Shares if we do not complete

our initial business combination within the Completion Window, (ii) in connection with a shareholder vote to amend our amended and restated

memorandum and articles of association (A) to modify the substance or timing of our obligation to allow redemption in connection with

our initial business combination or to redeem 100% of our Public Shares if we do not complete our initial business combination within

the Completion Window or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business

combination activity or (iii) if they redeem their respective shares for cash upon the completion of our initial business combination,

subject to applicable law and any limitations (including but not limited to cash requirements) created by the terms of the proposed business

In no other circumstances will a shareholder have any right or interest of any kind to or in the trust account.

we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection with the

business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro rata share of the

trust account.

Such shareholder must have also exercised its redemption rights described above.

These provisions of our amended and restated

memorandum and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be

amended with a shareholder vote.

In identifying, evaluating

and selecting a target business for our initial business combination, we encounter competition from other entities having a business objective

similar to ours, including other SPACs, private equity groups and leveraged buyout funds, public companies and operating businesses seeking

strategic acquisitions.

Many of these entities are well established and have extensive experience identifying and effecting business combinations

directly or through affiliates.

Moreover, many of these competitors possess greater financial, technical, human and other resources than

Our ability to acquire larger target businesses is limited by our available financial resources.

This inherent limitation gives others

an advantage in pursuing the acquisition of a target business.

Furthermore, our obligation to pay cash in connection with our Public Shareholders

who exercise or are forced to exercise their redemption rights may reduce the resources available to us for our initial business combination

and our outstanding Warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses.

Either of these factors may place us at a competitive disadvantage.

We currently have 2 executive

These individuals are not obligated to devote any specific number of hours to our matters, but they devote as much of their

time as they deem necessary to our affairs until we have completed our initial business combination.

The amount of time they devote in

any time period varies based on the stage of the business combination process we are in.

We do not intend to have any full-time employees

prior to the completion of our initial business combination.

Periodic Reporting and Financial Information

We have registered our Units,

Public Shares and Public Warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual,

quarterly and current reports with the SEC.

In accordance with the requirements of the Exchange Act, our annual reports, including this

Report, contain financial statement audited and reported on by Withum, our independent registered public accountant.

We will provide shareholders

with audited financial statement of the prospective target business as part of the proxy solicitation materials or tender offer documents

sent to shareholders to assist them in assessing the target business.

In all likelihood, these financial statement will need to be prepared

in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statement may be required

to be audited in accordance with the standards of the PCAOB.

These financial statement requirements may limit the pool of potential target

businesses we may conduct an initial business combination with because some targets may be unable to provide such statement in time for

us to disclose such statement in accordance with federal proxy rules and complete our initial business combination within the prescribed

We cannot assure our shareholders that any particular target business identified by us as a potential business combination

candidate will have financial statement prepared in accordance with the requirements outlined above, or that the potential target business

will be able to prepare its financial statement in accordance with the requirements outlined above.

To the extent that these requirements

cannot be met, we may not be able to acquire the proposed target business.

While this may limit the pool of potential business combination

candidates, we do not believe that this limitation will be material.

We have evaluated our internal

control procedures for the fiscal year ending December 31, 2024, as required by the Sarbanes-Oxley Act.

Only in the event we are deemed

to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to have

our internal control procedures audited.

A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding

adequacy of their internal controls.

The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley

Act may increase the time and costs necessary to complete any such business combination.

We are a Cayman Islands exempted

Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman Islands and, as such, are exempted

from complying with certain provisions of the Companies Act.

As an exempted company, we have applied for and received a tax exemption

undertaking from the Cayman Islands government that, in accordance with Section 6 of the Tax Concessions Act (Revised) of the Cayman Islands,

for a period of 20 years from the date of the undertaking, no law that is enacted in the Cayman Islands imposing any tax to be levied

on profits, income, gains or appreciations will apply to us or our operations and, in addition, that no tax to be levied on profits, income,

gains or appreciations or which is in the nature of estate duty or inheritance tax will be payable (i) on or in respect of our shares,

debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of

income or capital by us to our shareholders or a payment of principal or interest or other sums due under a debenture or other obligation

We are an “emerging

growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act.

As such, we are eligible to take

advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging

growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section

404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,

and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any

golden parachute payments not previously approved.

If some investors find our securities less attractive as a result, there may be a less

active trading market for our securities and the prices of our securities may be more volatile.

In addition, Section 107 of

the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided

in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

In other words, an “emerging

growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We intend to take advantage of the benefits of this extended transition period.

We will remain an emerging

growth company until the earlier of (1) the last day of the fiscal year (a) following November 24, 2028, (b) in which we have total annual

gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value

of our Class A Ordinary Shares that are held by non-affiliates exceeds $700 million as of the prior June 30 th , and (2) the

date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

Additionally, we are a “smaller

reporting company” as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take advantage of certain reduced

disclosure obligations, including, among other things, providing only two years of audited financial statement.

We will remain a smaller

reporting company until the last day of the fiscal year in which (i) the market value of our Ordinary Shares held by non-affiliates exceeds

$250 million as of the prior June 30th, and (ii) our annual revenues exceed $100 million during such completed fiscal year or the market

value of our Ordinary Shares held by non-affiliates exceeds $700 million as of the prior June 30.

References in this section to “we,” “our,” “us,” the “Company” or “Terrestrial Energy” generally refer to Terrestrial Energy Inc.

and its subsidiaries.

Terrestrial Energy Inc.

is an advanced nuclear technology company developing the Integral Molten Salt Reactor nuclear plant (“IMSR Plant”), which uses the Company’s proprietary design of Molten Salt Reactor (“MSR”).

Our mission is to transform global energy markets by commercializing our IMSR Plant, which will deliver low-carbon electricity and industrial heat with superior economics, speed to deployment, and siting flexibility.

In a world demanding rapid, scalable nuclear solutions, the IMSR Plant offers a viable, efficient alternative to both the limitations of legacy nuclear and the intermittency of renewables.

Corporate History

HCM II Acquisition Corp.

(“HCM II”) was a special purpose acquisition company incorporated on April 4, 2024, as a Cayman Islands exempted corporation for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

On October 23, 2025, HCM II domesticated as a Delaware corporation and changed its name to “Terrestrial Energy Inc.” (the “Company”).

On October 28, 2025, pursuant to the Business Combination Agreement, dated as of March 26, 2025, as amended (the “Business Combination”), the Company completed the Business Combination with Terrestrial Energy Development Inc.

(“TEDI”), a Delaware corporation, with TEDI surviving as a wholly owned subsidiary of the Company.

Following the Business Combination, the Company became a holding company whose operations are conducted through TEDI and whose primary asset is its equity interest in TEDI.

For accounting and financial reporting purposes, the Business Combination was accounted for as a reverse recapitalization, with TEDI treated as the accounting acquirer and HCM II treated as the accounting acquiree.

Market Opportunity

Global energy fundamentals are shifting rapidly in response to geopolitical tensions, infrastructure demands, and surging electricity consumption, with nuclear energy emerging as a critical component of future supply.

According to the U.S.

Energy Information Agency (“EIA”) and its International Energy Outlook of 2023, global primary energy demand is projected to rise 29% from 2025 to 2050, and electricity generation by 43% in that same period.

Nuclear energy’s role in meeting this demand is driven by both energy security objectives and changing requirements from innovations such as those in the digital economy.

In advanced economies, energy supply growth is hindered by electric transmission and pipeline congestion, leading governments and industrial consumers to reconsider electricity infrastructure and reframe nuclear energy, particularly distributed generation solutions with small and modular nuclear plants as a pillar of strategic energy reliability.

Governments are responding with forceful and coordinated action.

On May 23, 2025, the President of the United States signed a set of executive orders that lower deployment barriers and streamline federal support for developing new nuclear energy technologies.

These actions follow a broader policy pivot, where national energy strategy is increasingly aligned with national security strategy.

Compared to past decades, the recent policy recognition of the advantages of nuclear energy is exceptional and a positive development for the nuclear energy industry.

In this policy and market demand context, we believe our IMSR Plant is well-suited to meet the urgent energy priorities now shaping markets and policy across advanced economies to deliver secure, reliable, and resilient power at a time when nations are reasserting control over critical infrastructure and supply chains.

The IMSR Plant we are developing offers a scalable solution for governments and industries seeking reliable energy at fossil fuel scale.

It is designed to provide low-cost, firm power and deployable at or near sites of industrial demand enabling distributed generation with customizable thermal and electric output.

This decentralized capability will reduce transmission risks, enhance energy autonomy, and support rapid deployment without requiring major grid expansion.

As demand accelerates across sectors, we believe our IMSR Plant will enable and promote both economic competitiveness and sovereign energy resilience.

We estimate our current serviceable addressable market (“SAM”) to exceed $1.4 trillion in Organisation for Economic Co-operation and Development (“OECD”) countries ($800 billion in grid-based electricity and $600 billion in high-temperature industrial heat), growing to $1.9 trillion by 2050.

IMSR and Gen IV Technology

Our IMSR is a Molten Salt Reactor (“MSR”), one of the generic advanced reactor technologies classified as a Generation IV (“Gen IV”) reactor by the Generation IV International Forum (“GIF”), an intergovernmental organization founded in 2001 by the United States, Canada, the United Kingdom, and other member countries as they aimed to respond to the economic, environmental and social requirements of nuclear energy in the 21 st century.

GIF members seek to bring to market advanced reactors through international collaboration for their timely development.

Its objectives for selecting Gen IV reactor technologies are those that encompass enhanced fuel efficiency, minimized waste generation, economic competitiveness, and adherence to rigorous safety and proliferation resistance measures.

The Gen IV reactor class is a diverse set of reactor technologies, fundamentally distinct from legacy (Light Water Reactor) nuclear technology.

Despite wide variations, Gen IV reactor technologies generally have a principal common operational attribute:

they operate at higher temperatures (approximately 400°C to 800°C).

We believe that the reactor technology and nuclear plant design choices that we have used in our IMSR Plant design address a major factor limiting the growth of nuclear energy supply:

the fundamental capital inefficiency of legacy nuclear technology, and by extension the uncompetitive levelized cost of nuclear energy supply over full life of plant.

Legacy nuclear technology was originally developed for military submarine propulsion and adapted for civilian use in the 1950s.

New nuclear plants built using legacy nuclear technology today face increasing economic challenges and a threat of economic obsolescence due to rising construction costs, costly and complex regulatory requirements, and limited operational flexibility.

We believe that new plants built on legacy nuclear technology will not be commercially viable without substantial public subsidies and sponsorship.

In addition, they are generally only well suited for serving electric grid markets and are not well aligned with energy demand requirements for distributed and efficient supply of cost-competitive and flexible thermal and electric energy.

An MSR uses a molten salt as both the nuclear fuel and reactor coolant, in contrast to legacy nuclear technology that uses a solid nuclear fuel arranged in assemblies of fuel rods and water as the reactor coolant.

Molten salt coolants are thermally far more stable than water, which enables stable, high-temperature reactor operation.

This importantly allows for high-efficiency steam turbines operation and electric power generation, as well as the direct supply of high-temperature thermal energy for industrial plant operators seeking clean energy alternatives to fossil fuel combustion in industrial processes.

Our IMSR Plant incorporates our proprietary design of MSR.

We have developed a recognized expertise in MSR technology since inception of our company in 2013.

At the invitation of the Canadian government in May 2019, our Company, represented by our Chief Technology Officer, joined the Gen IV International Forum as a signatory to the MSR provisional System Steering Committee.

To our knowledge our Company is currently the only private sector company that is a signatory;

we believe this demonstrates the Company’s leadership position in MSR technology.

We have designed our IMSR Plant to be small and modular, which we believe will enable greater geographic siting flexibility and more efficient construction through the use of factory manufactured modules and their on-site assembly.

We believe the market will demand clean, firm, and cost-competitive energy at, or near to, the point of industrial demand to mitigate grid and pipeline congestion.

We believe that the IMSR Plant’s attributes including its size and modular architecture, and economic efficiency, may make it a competitive and timely solution to this demand.

Our IMSR Plant will use low enriched uranium enriched to <5% U235, which we refer to as standard-assay low enriched uranium (“SALEU”).

This is the nuclear fuel used by the large majority of the world’s nuclear plants and widely available in today’s nuclear supply chain.

We have intentionally avoided high-assay low enriched uranium enriched to between 15% and 19.9% U235 (“HALEU”), the nuclear fuel used by competing Gen IV technologies.

We believe that HALEU presents substantially greater supply chain challenges than the SALEU used by the IMSR Plant.

Accordingly, we believe that the use of SALEU will position the IMSR Plant more favorably for earlier deployment than other Gen IV technologies using HALEU as their nuclear fuel.

Since 2015, we have engaged with U.S.

and Canadian nuclear regulators and achieved clear IMSR Plant regulatory milestones, which are described in the “Regulatory Matters” section below.

Based on our experiences from our engagements with nuclear regulators, including the Canadian regulator’s programmatic review of our IMSR Plant design concluded in April 2023, we believe that the IMSR Plant is well-positioned to secure regulatory approval for commercial operations in the U.S.

and other target markets upon application by customers.

Commercialization of the IMSR Plant is subject to applicable regulatory approvals.

See “— Regulatory Matters” below.

Our business model is intended to support long-term, recurring, and capital-efficient revenue streams through the development, commercialization, and deployment of our IMSR Plant.

Our customers will be IMSR Plant project developers who are also likely to be the owner-operators of the IMSR Plant to whom we plan to provide engineering and construction services and supply fuel and key components.

We intentionally avoid a build-own-operate model for nuclear plants, preferring to leverage scale in our nuclear supply chain to support faster deployment of IMSR Plants to the owners/operators of nuclear plants, subject to regulatory and market conditions.

We expect our revenues to derive from four principal streams — (i) pre-construction services, (ii) construction services and component supply, including the main reactor component called the “IMSR Core-unit”, (iii) post-construction IMSR Core-unit supply and (iv) post-construction IMSR fuel supply.

Each revenue stream is anticipated to be repeatable across multiple IMSR Plant projects simultaneously, and IMSR Core-unit and IMSR fuel supply revenues are structured to recur throughout the 56-year operating life of an IMSR Plant.

The operating life of the IMSR Plant is 56 years by design;

revenue generation for the Company begins during pre-construction and construction, typically four years or more, making the period of revenue generation for the Company over 60 years excluding decommissioning services.

Each subsequent IMSR Core-unit replacement cycle provides an additional revenue opportunity at attractive margins.

In response to evolving market demand for our IMSR Plant, we have a pipeline of over ten early-stage IMSR Plant projects each at an identified site.

We play an active role in the establishment of each project and its member consortium.

An IMSR Plant project is established with an initial consortium of members, and each includes one or more of off-takers, site owners, nuclear plant operators, and suppliers expressing interest in the project with an MOU and/or LOI.

Our portfolio of early-stage projects covers a range of industrial sectors such as mining, chemical and petrochemical production, data centers, and grid power provision.

Our near-term project milestones include the completion of site characterization work, which is the antecedent to the project’s submission of a USNRC Construction Permit application.

We establish a project’s initial consortium by drawing from our portfolio of over 50 collaborative industry relationships, where each such relationship has expressed an interest in our IMSR Plant and has undertaken investigations and due diligence.

We expect these collaborative industry relationships to support the growth of our project pipeline with additional IMSR Plant projects.

Illustrating this approach to IMSR Plant project development from the formation of its initial consortium, we have announced developments with consortia members and projects over the last 12 months with industrials, suppliers, research partners, and site owners, such as Schneider Electric, Zachry Group, Viaro Energy, Energy Solutions, Texas A&M University and most recently Ameresco.

To illustrate further, our Texas A&M project consortium consists of an EPC, a nuclear utility, the site owner, a nuclear fuel supply, and other suppliers.

Our Texas A&M project is a collaboration with Texas A&M University, a leading nuclear engineering and technology university in the U.S., to construct and operate a commercial IMSR Plant at its RELLIS campus in Bryan, Texas, as well as undertake IMSR system R&D testing activities employing the expert resources of the university’s engineering faculty.

Our collaboration with Texas A&M has the potential to accelerate our business plans, in particular as it aligns with recent policy statements supporting the commercialization of advanced nuclear technologies made by the Trump Administration, and U.S.

Federal and Texas state governments.

We believe the development and commercialization of the IMSR Plant aligns with increasing U.S.

and international policy support for nuclear innovation, driven by national energy supply insecurities, and elevated by geopolitical risks such as the Ukraine War.

Other recent international developments, such as the declarations at the 28 th Conference of the Parties to the UN Framework Convention on Climate Change (“COP28”) in Dubai, have underscored the necessity of a massive expansion of nuclear energy supply to achieve policy, economic and environmental goals.

Our technology development roadmap targets first commercial operations of an IMSR Plant during 2034, subject to regulatory approval and financing, with commercial fleet deployment anticipated in the late 2030s.

Our IMSR Plant’s Competitive Strengths

Our IMSR Plant incorporates operating characteristics that differentiate it from nuclear plants built using legacy nuclear technology as well as other competing Gen IV reactor technologies.

We believe that these differentiating operating characteristics create competitive advantages for our IMSR Plant.

• High-temperature and low-pressure reactor operation with high inherent safety for efficient electricity generation and thermal energy supply for industrial processes.

Our IMSR Plant’s MSR technology is designed to enable it to supply thermal energy at 585°C from a reactor that operates at low pressure with high inherent safety.

These are not the defining characteristics of legacy nuclear technology nor many other Gen IV technologies.

Importantly at this high temperature, the IMSR Plant facilitates high-efficiency steam turbine operation and electric power generation as well as direct application to a broad set of industrial processes that require these high temperatures, such as chemical synthesis, petrochemical refining, materials manufacturing, and efficient hydrogen production.

By comparison, legacy nuclear technologies typically supply thermal energy at <300 °C, which when used for steam generation leads to lower efficiency for turbine operation and electric power generation.

Other current Gen IV competing technologies generally range from 440-585 °C and are less well-suited for high temperature industrial applications.

• Availability of Nuclear fuel supply .

Our IMSR Plant uses SALEU nuclear fuel, as opposed to more expensive and supply-constrained HALEU nuclear fuel relied upon by other competing Gen IV technologies, including those using MSR technology.

SALEU fuel has been the standard fuel used by legacy nuclear technologies for many decades, and as such, is generally available from the current nuclear supply chain in commercial quantities, and the regulatory requirements for its safe and secure use are long established and widely understood in the nuclear industry.

Our use of SALEU aligns our IMSR Plant with existing fuel suppliers and fuel supply regulatory frameworks for production and transportation, potentially supporting earlier commercialization.

We believe that our IMSR Plant is one of the very few Gen IV nuclear plant designs that provides high temperature output using SALEU as opposed to HALEU nuclear fuel.

• Cost Efficiencies and Use Flexibility from Separating Nuclear and Thermal/Electrical systems.

Our IMSR Plant’s Nuclear Facility consists of nuclear systems that are required to comply with nuclear regulatory standards for operation (see Figure 3 on page 18 below), the Plant’s Thermal and Electric Facility are separate and remote from nuclear systems.

We believe that as a result of MSR technology and plant design features, the Thermal and Electric Facility systems fall outside the scope of nuclear regulation, which we believe provide the IMSR Plant a competitive advantage compared to legacy nuclear reactors and most other Gen IV nuclear technologies.

This regulatory separation is typically not achievable with legacy nuclear technology nor with other Gen IV technologies, which generally integrate nuclear and thermal supply systems within a single set of regulated nuclear systems.

We believe that the functional and regulatory separation of the IMSR Thermal and Electric Facility enables commercial flexibility to tailor the IMSR Plant’s thermal and electrical output to specifical industrial needs, particularly for near- or co-located deployment at industrial facilities.

In addition, as Thermal and Electric Facility systems and their components are not required to meet nuclear-grade standards, we believe that we will be able to construct the Thermal and Electric Facility with many off-the-shelf components from the broader industrial supply chain.

We anticipate that this will reduce costs, reduce procurement timelines, and enable greater scalability in delivery.

• Load-following and black-start capability.

Our IMSR Plant is designed to be capable of rapid load-following, enabling it to back-up variable wind and solar generation.

Our IMSR Plant is also capable of starting and operating without grid power (“black-start capability”);

nuclear plants using legacy nuclear technology are typically not black-start capable and exhibit poor if any capability to load-follow.

We believe these features of our IMSR Plant will contribute to grid resilience and reliability and therefore are valued by grid operators.

• Plant size and siting flexibility.

Our IMSR Plant is sized to supply 822MW (net) thermal, which can be used to generate 390MW (net) of electricity if desired.

We believe this scale is well-suited for both grid and industrial customers seeking distributed generation and both thermal and electric demand.

The IMSR Plant is intended to support near- or co-located siting including “behind-the-fence”, enabling direct delivery of at-scale, clean, firm thermal and electric energy to the point of industrial demand, and therefore avoiding electric grid transmission and natural gas pipeline congestion.

• Modular architecture for efficient construction.

Our IMSR Plant is designed with modular architecture to support factory fabrication of key systems and components.

This modularity is intended to substitute on-site construction with more efficient and lower cost factory-based construction, enable further efficiencies from serial component production, and ultimately reduce IMSR Plant construction time and cost.

• Supply Chain.

Our supply chain strategy covers sourcing of components such as reactor vessels, heat exchangers and steam turbines, as well as materials such as graphite and the chemical components of the IMSR fuel salt eutectic (“IMSR Fuel Salt”) and services necessary to construct and operate IMSR Plants.

Our IMSR Fuel Salt avoids the use of isotopically enriched lithium or beryllium proposed by others.

Our supply chain strategy aims to secure these components, materials and services from suppliers at the scale necessary to achieve our objective of fleet operation of IMSR Plants in the late 2030s.

• Demonstrated MSR technology.

Our IMSR design intention has been to leverage research and development of MSRs by national laboratories over many decades, starting in the 1950s and 1960s at the U.S.

Department of Energy’s Oak Ridge National Laboratory (ORNL), which included the construction and operation of three test reactors.

Our design process has combined this extensive body of historic R&D with the powerful computing and modeling capabilities of the modern nuclear industry.

We believe that this approach facilitates an efficient IMSR Plant design process and supports our timetable for commercialization.

• Experienced Professional Management Team with Deep Technical Experience.

We have a highly educated and growing workforce of approximately 80, 29 of whom have advanced degrees in engineering and science.

We have a seasoned leadership team with over 170 years of cumulative experience in the nuclear and energy industries, in addition to those with nuclear regulatory experience over many decades with the U.S.

Nuclear Regulatory Commission (“USNRC”) and the Canadian Nuclear Safety Commission (“CNSC”).

Together, we bring expertise and experience from several industries, such as from the nuclear power, aerospace, and petrochemical sectors, to deliver on our mission.

Historical Results and Recent Developments

To date our revenues have derived from preliminary site assessment and pre-construction engineering services.

Since inception, we have invested substantial resources in R&D and testing of IMSR nuclear systems to complete the IMSR Plant design and to prepare for regulatory submissions.

Accordingly, we have a history of operating losses and negative cash flows since inception funded with a series of private placements;

our accumulated deficit is $124.6 million as of December 31, 2025.

To commercialize our IMSR Plant will require additional capital investments;

since December 31, 2024, we have raised $36.7 million of additional capital, including a $25.8 million preferred stock private placement on July 1, 2025, and $292 million of gross proceeds before expenses from the business combination as discussed above.

For further information regarding our historical results and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operation of Terrestrial Energy” and our consolidated financial statements included elsewhere herein.

For information regarding risks regarding our business, see “Risk Factors — Risks Related to Our Business and Industry” and “— Risks Related to Compliance with Law, Government Regulation and Litigation” and “— Risks Related to Terrestrial Energy’s Capital Resources.”

Energy market supply-demand dynamics

We believe recent energy market fundamentals create a compelling demand case for a large-scale expansion of nuclear energy supply.

Global energy demand continues to increase driven in part by energy-intensive industrial transformation.

In parallel, governments and major industrials and technology companies are increasingly focused on technologies that can deliver clean, firm, and cost-competitive energy supply at the point of energy demand.

We believe nuclear energy is the only scalable supply source that meets these anticipated demand requirements.

Additional structural drivers are also contributing to increased demand for new nuclear capacity and distributed energy generation solutions.

These include energy security concerns, grid transmission and natural gas pipeline congestion, and industrial decarbonization needs.

We believe these pressures, amplified both by government policy and growing energy demand from energy-intensive industries, create a strong stimulus for the nuclear sector to deliver supply solutions.

Governments are responding with significant and clear policy support as well as ambitious deployment targets.

At COP28 in 2023, the United States and more than twenty other countries made commitments to triple global installed nuclear capacity by 2050.

We believe the operational and performance merits of our IMSR Plant place us in a competitive market position as these strong sector dynamics unfold.

The Trump administration has continued to signal its support for nuclear energy, with specific policy steps to promote domestic nuclear energy, including supporting advanced reactors, expediting construction permit review, and supporting continued research and development, and issued a series of executive orders on May 23, 2025, further promoting domestic nuclear energy.

President Trump’s executive order in May 2025 created a new U.S.

Department of Energy (“DOE”) pathway (the Advanced Reactor Pilot Program) to fast-track commercial licensing activities for small and modular nuclear plants that use advanced reactor technologies, expediting their broad deployment.

On August 12, 2025, the Company announced that it had been selected for the DOE’s Advanced Reactor Pilot Program.

Fundamental limitations of legacy nuclear technology

In our view, nuclear plants using legacy nuclear technology are not well-positioned to take advantage of this nuclear renaissance as they are saddled with acute economic and efficiency challenges.

Over the past decade, every new nuclear plant construction project in North America and Europe using legacy nuclear technology experienced significant cost overruns, construction delays, and other economic and operational challenges.

We believe these outcomes are the manifestations of the economic limitations of legacy nuclear technology due to low capital efficiency, high upfront costs, and long construction timelines.

We believe these projects are economically cost-prohibitive on a standalone project basis and only moved forward due to large-scale public sector sponsorship.

Projects such as the Alvin W.

Vogtle Units 3 and 4 (U.S.), Olkiluoto 3 (Finland), Flamanville (France) and Hinkley Point C (UK) typify these challenges.

Vogtle Units 3 and 4 were completed seven years behind schedule with a cost overrun of $17 billion.

The National Association of Regulatory Utility Commissioners (“NARUC”), the association of state public utility commissioners, has expressed apprehension toward approving similar large-scale nuclear projects in the future.

The fundamental economic limitations of legacy nuclear technology are linked to its operational characteristics.

Using water as the reactor coolant, legacy nuclear technology is limited to low-temperature reactor and high-pressure operation.

This results in the engineering expense of designing high pressure cooling systems to nuclear safety standards, and the consequences of low-temperature heat and steam supply (<300°C), which are low turbine efficiency for electricity generation and high levelized cost.

In addition, at these low temperatures, legacy nuclear technologies are generally unsuitable for many industrial heat processes, such as chemical synthesis and petrochemical refining, which generally require high-temperature (>400 °C) thermal energy supply.

With these limitations, we believe legacy nuclear technology is not practical for thermal energy supply for industrial applications and its use is limited to electric power generation.

Furthermore, the need to strive against low efficiency for acceptable commercial performance has resulted in the repeated application of economies of plant unit-scale as plant designs have evolved, leading to ever larger plant designs.

With increasing size, plants using legacy nuclear technology have trended toward centralized deployments, which are generally unsuitably sized for distributed energy generation and private project financing models.

We believe the IMSR Plant design incorporates technology and design features to address these limitations.

Industrial thermal energy supply

The industrial sector has proven to be an obstacle to achieve decarbonization targets.

Due to a lack of practicable alternatives to fossil fuel combustion for thermal energy supply, the sector remains one of the most carbon-intensive segments of the global economy, accounting for more than 30% of final energy demand according to the International Energy Agency, and 20% of CO 2 emissions according to analysis by McKinsey & Company.

Industrial thermal energy supply remains dependent on natural gas and heating oil, unlike electric energy supply, which has already been partially decarbonized with hydroelectric plants, plants employing legacy nuclear technology, and renewable (wind and solar) power plants.

Department of Energy (“DOE”) and International Energy Agency (“IEA”) both cite industrial process heat as the most difficult segment to decarbonize, due to its high temperature requirements, 24/7 demand, and sensitivity to energy cost.

The IMSR Plant is designed to supply industrial-grade heat at 585 °C — sufficient for more than two-thirds of industrial thermal applications.

The IMSR Plant’s ability to provide reliable, high-temperature thermal energy without greenhouse gas emissions allows it to replace fossil combustion systems at many industrial facilities, such as those associated with chemical and petrochemical production.

Electricity supply

Power plants with the ability to “dispatch” supply — meaning supply that can be quickly varied to meet fluctuations in demand — are highly valued by grid operators mandated to deliver reliable grid supply for all consumers irrespective of the time of day or local weather conditions.

While supply from renewable (wind and solar) plants can provide low-cost electricity, it is generally not dispatchable, which may create challenges for grid reliability in the absence of complementary dispatchable supply.

Today, dispatchable supply is largely provided by fossil fuels, which are vulnerable to fuel price volatility and contribute significantly to greenhouse gas emissions.

Our IMSR Plant is designed to provide grid operators with new dispatchable electricity supply without the environmental impacts of fossil fuel generators.

We believe that the IMSR Plant’s 390 MW (net) designed electrical output is also capable of meeting utility-scale needs for dispatchable zero-carbon electric energy supply, and its small land footprint allows for flexible siting and distributed generation, which has the potential to mitigate electric grid congestion.

As described in more detail below, we believe the IMSR Plant would also pair well with many of the hundreds of sites in North America which previously hosted coal generation plants.

Competitive levelized cost of thermal and electricity

We estimate, based on internal cost modeling and market data, that the IMSR Plant may achieve a Levelized Cost of Electricity (“LCOE”) of approximately $69/MWh and a Levelized Cost of Heat (“LCOH”) of approximately $8.60/MMBtu.

We believe these estimates may position the IMSR Plant favorably in competitive markets relative to competing dispatchable energy supply alternatives, including solar plants and battery storage, combined-cycle and simple-cycle natural gas plants, and some plants using legacy nuclear technology.

The assumptions for the estimated LCOE of $69/MWh and LCOH of $8.60/MMBtu draw from the “Nth” Commercial Plant” (“NCP”) basis where both upfront capital expenditures and operating & maintenance costs are reduced from the “First Commercial Plant” (“FCP”) as a result of learning curve effects on costs from prior experience.

The Company’s cost estimates for its FCP are in part derived from capital cost estimates obtained by the Company from third-party nuclear plant cost engineers during a procurement engagement and in collaboration with a nuclear utility during 2020 and 2021.

In 2025, Terrestrial Energy revised these estimates to reflect the estimated impact of inflation on the materials and services costs estimated in 2021.

The target date of the deployment of the NCP cannot be estimated based on the early stage of our commercial pipeline.

The LCOE and LCOH estimates are based on an IMSR Plant consisting of two operating IMSRs for a plant capacity of 390 MWe or 822MWt net output.

The calculations of LCOE and LCOH are principally derived from:

the total amount of electricity (MWh) or heat (MMBtu) generated and operating & maintenance costs over the 56-year operating life of the plant;

total plant upfront capital expenditures;

and cost of capital.

The LCOE and LCOH is defined by the cost that achieves a project zero net-present-value.

We have assumed a 7.5% and 7.0% for the project developer’s cost of capital over the project’s construction and operation periods, respectively.

We have assumed a 4-year construction time and a 95% plant capacity factor.

We have not assumed any federal or state subsidies, although we believe that a number may be available.

Our LCOE and LCOH estimates are most sensitive to the IMSR Plant’s upfront capital expenditures, and the project developer’s cost of capital assumptions as our IMSR Plant is a long duration asset.

Our LCOE and LOCH calculations were prepared in good faith by our management team and are based on our management’s reasonable estimates and assumptions with respect to the expected performance of Terrestrial Energy, as applicable, at the time those estimates were prepared and speak only as of that time.

We are not aware of subsequent developments that would materially impact our views regarding these estimates as of the date of this filing.

Key market verticals for deployment

We are focused on deploying the IMSR Plant in three industrial verticals:

data center electricity supply, thermal and electric energy supply for the industrial sector, and in the coal sector as a technology to convert (“repower”) coal plants.

We believe that the IMSR Plant’s operational capabilities are most competitive in these three large market verticals beyond grid deployment.

• Data center supply.

The rapid growth of artificial intelligence, cloud computing, and digital infrastructure has led to equally rapidly growing energy demands for around-the-clock, reliable, scalable electricity.

The IMSR Plant is designed to provide cost-competitive, firm dispatchable power with zero carbon emissions, which we believe may be a viable alternative in this market sector to power plants using fossil fuel thermal generation, intermittent renewable technology (wind and solar) and other nuclear technologies.

• Industrial.

Our IMSR Plant addresses a major and unsolved decarbonization challenge:

the provision of clean, firm, high-temperature thermal energy for industrial processes.

Many of these — such as chemical synthesis, petrochemical refining, materials manufacturing, and efficient hydrogen production — require sustained thermal energy at temperatures above the capabilities of legacy nuclear technology.

The IMSR Plant is designed or expected to deliver heat at temperatures suitable for more than two-thirds of these applications while also offering co-generation of electric energy.

Its compact footprint and modular design may support near- and co-located deployment across a range of industrial facilities.

• Repowering Coal Plants.

A potential large and immediate market for our IMSR technology is in the replacement of retiring coal-fired power plants.

According to a 2022 U.S.

Department of Energy report, more than 80% of U.S.

coal plant sites are suitable for conversion to advanced nuclear based on factors such as infrastructure, transmission access, and regulatory feasibility.

These sites represent a 198.5 GWe installed base, much of which is slated for retirement by 2035.

The IMSR Plant is well matched to these projects due to its compatible output temperature and suitable size, and potential reuse of existing balance-of-plant assets such as generators, cooling systems, switchyards, labor force and grid interconnections.

This may reduce project costs and shorten construction timelines.

Our Business Model

Our business model is intended to support long-term, recurring, and capital-efficient revenue streams through all phases of deployment and operation of our IMSR Plant.

Our customers will be the owner-operators of the IMSR Plants to which we provide pre-construction and construction engineering services and supply of fuel and major components.

We intentionally avoid a build-own-operate (BOO) model for nuclear plants, preferring to leverage the existing scale and capabilities in our nuclear supply chain to support faster deployment of IMSR Plants.

Our revenue strategy spans the 60+ year IMSR Plant project lifecycle (its 56-year operating life plus plant pre-construction and construction periods).

This full-lifecycle, low capital expenditure business model is purposefully designed to maximize returns while reducing capital intensity and exposure to construction and operational risks.

We are strategically positioned as a nuclear plant designer, major components (most importantly, the reactor itself — the IMSR Core-unit) and nuclear fuel supplier (the IMSR Fuel Salt), rather than a plant owner or operator, thereby reducing exposure to construction risk, accelerating the path to scalability, and establishing a repeatable project development template that may support recurring revenues across a growing base of IMSR Plants in construction and operation.

This approach broadly resembles established business models in the nuclear sector, where nuclear plant design providers supply key components including IMSR Fuel Salt and long-term support services without owning or operating end-user infrastructure.

Project economics

The expected cost for our NCP, inclusive of all construction, commissioning, and licensing activities is based on detailed cost engineering work firstly conducted by a third-party engineering firm with a prospective owner-operator customer in 2020 – 2021, and leverages the management team’s combined industrial and nuclear engineering experience.

The capital cost range reflects a modeled NCP scenario, incorporating anticipated cost reductions from supply chain maturation and learning curve effects.

Early-stage plants are expected to have higher costs, while later units benefit from standardization, volume procurement, project management efficiencies, and reduced construction time and risk leading to lower financing costs.

For further information regarding assumptions and other considerations in connection with these estimates, see “— Lifecycle Unit Economics” below.

We anticipate that capital expenditures to construct an IMSR Plant will be borne by the project’s consortium partners, primarily by its operator, offtake customers, suppliers as well as third-party project investors, which may include the public sector.

At the project level, we expect to be supplying the IMSR Plant design, key components (such as the IMSR Core-unit and associated systems), the IMSR Fuel Salt, and services, many under long-term contract arrangements as described below.

Revenue streams

We expect our revenues to derive from the Company’s project delivery model, which consists of four principal revenue streams (see Figure 1).

Each is anticipated to leverage Terrestrial Energy’s proprietary nuclear plant design and technology, its licensing expertise, its developed supply chain, and the project delivery models’ repeatability across multiple IMSR Plant projects operating simultaneously.

The IMSR Core-unit and IMSR Fuel Salt supply revenues are structured to recur throughout the 56-year operating lifecycle of an IMSR Plant (see Figure 2).

Each subsequent IMSR Core-unit replacement cycle provides an additional revenue opportunity at attractive margins.

The selection of these four revenue streams is intended to optimize recurring revenue potential, reduce capital intensity for Terrestrial Energy, and support a scalable fleet-based business model.

Illustrative potential revenue streams

Pre-construction services.

We anticipate generating early-stage revenue through the supply of site- and use-specific engineering services to IMSR Plant projects to support project development, construction and procurement planning, and the preparation of USNRC construction permits.

These services are typically offered on a fixed-fee or time-and-materials basis.

While comprising a modest portion of total IMSR Plant life-time revenues (~4%), they create early cash flow, initiate project development activities, establish relationships with IMSR Plant developers, and the supply chain.

We have conducted several engagements related to pre-construction services that have generated initial revenue.

Construction services, IMSR Core-unit and component supply.

We anticipate generating further revenue through the supply of engineering services, major components (including supply of first IMSR Core-units), IMSR Fuel Salt to IMSR Plant projects supporting construction, USNRC operation license submissions, and commissioning.

This revenue stream is expected to represent approximately 23% of IMSR Plant project lifecycle value, supported by a developed supply chain and nuclear-qualified manufacturing partners, enabling scalable deployment and cost control.

Post-construction IMSR Core-unit supply.

We anticipate generating further revenue from the supply of IMSR Core-units to operational IMSR Plants over the expected 56-year operating life and ancillary operations and maintenance (“O&M”) services.

We expect this to be a significant and recurring revenue stream, which occurs on a predictable seven-year cycle over a plant’s anticipated 56-year operating lifespan.

Each IMSR Core-unit is replaced periodically with a “plug-and-play” maintenance procedure, which we believe achieves that necessary simplicity of maintenance to achieve a high plant uptime contributing to its capital efficiency.

This model represents over 55% of IMSR Plant project lifecycle revenues and may support recurring major component supply revenue and gross margin contribution over time, subject to market adoption and plant deployment.

To illustrate, over a typical 56-year operating life of an IMSR Plant, sixteen IMSR Core-units are required, the initial pair at commissioning plus fourteen replacements.

Consequently, our revenue model is expected to provide recurring major component supply revenues per plant over many decades, subject to market demand and customer deployment.

Post-construction IMSR fuel supply.

We intend to also supply IMSR Fuel Salt to operational IMSR Plants over the plant’s 56-year operating life together with ancillary O&M services.

IMSR Fuel Salt must be manufactured to the precise specifications of the IMSR Plant design as approved by the USNRC in the U.S.

or the relevant nuclear regulator in non-U.S.

We intend to provide services at the end of IMSR Plant operating life to assist with the decommissioning of the IMSR Plant and its spent IMSR Fuel Salt.

The structure of the IMSR Plant project lifecycle, with a multi-decade operational design life, periodic core replacements, ongoing O&M contracts, and fuel supply, enables long-term revenue visibility that may provide a strong foundation for recurring, predictable, and durable cash flows, subject to successful commercialization.

With each IMSR Plant requiring post-construction operations and maintenance support for 56 years, replacement of IMSR Core-units and IMSR Fuel Salt supply will generate revenue at regular intervals, such that we expect our business model to deliver recurring revenues with defensible gross margins that scale linearly with the installed base of operating IMSR Plants.

Lifecycle unit economics

Figure 2 below sets for our estimated lifecycle unit economics from the revenue streams described above and are based on a 60+ year IMSR Plant project lifecycle, with recurring revenue from IMSR Core-unit replacements every seven years and ongoing annual IMSR Fuel Salt supply.

The model assumes a pre-construction stage and a four-year construction stage, with Terrestrial Energy earning revenue at each stage through engineering, procurement, and component supply services.

The underlying project delivery model with its revenue volume and margin assumptions are drawn from the management team’s estimates based on their experience in the nuclear energy industry.

Specifically, unit economics are calculated at NCP status, reflecting industrial learning effects over a planned 10-plant deployment cycle, and include updated assumptions for higher uranium and enrichment costs, while excluding decommissioning expenses.

See “— Competitive levelized cost of thermal and electricity” above.

Our unit economics calculations were prepared in good faith by our management team and are based on our management’s reasonable estimates and assumptions with respect to the expected performance of Terrestrial Energy, as applicable, at the time those estimates were prepared and speak only as of that time.

We are not aware of subsequent developments that would materially impact our views regarding these estimates as of the date of this filing.

IMSR Plant project lifecycle unit economics

IMSR Plant Overview

IMSR Plant with its customizable Thermal and Electricity Facility (“B”)

The figure above illustrates that the conceptual customization of Thermal and Electric Facility enabling the integration of other energy systems such as thermal storage to supply a near-located industrial facility (“C”).

We believe that the Thermal and Electricity Facility can be hybridized with other energy systems, such as by integration with natural gas thermal energy supply.

This is intended to serve as an initial source of thermal energy supply, and later as a backup source of thermal energy supply to the operating IMSR Nuclear Facility.

We believe the customization of the IMSR Thermal and Electricity Facility with the integration of natural gas systems will accelerate commercial energy supply and increase the reliability of energy supply from a fully operational IMSR Plant;

in our experience early electricity supply and reliably supply are both prized by industrial users and datacenter operators.

While there are many methods to customize the IMSR Thermal and Electricity Facility, we are focused on the development of the small and modular regulated nuclear systems that form the Nuclear Facility (“A”) in the figure above, which is not conceptual but rendered from civil structures engineered by Terrestrial Energy and represents a part of IMSR Plant design that CNSC’s VDR reviewed.

Our Company has a generic configuration of the Thermal and Electric Facility for 390 MW of electricity supply.

We expect that the configuration of the Thermal and Electric Facility will be customized by project level requirements for energy supply.

Plant and infrastructure.

Our IMSR Core-unit constitutes the primary nuclear system.

It houses the key components such as graphite moderator, IMSR Fuel Salt, primary pumps and primary heat exchanges.

We have agreements for the design and development of these components.

Our supply strategy includes working with suppliers on plant infrastructure, such as turbine generators, simulation technology, and product lifecycle management.

Graphite supply.

Our IMSR Core-unit utilizes a thermal spectrum nuclear system with graphite as moderator, requiring approximately 125 metric tons of graphite per Core-unit.

We are evaluating the optimal graphite grade from variations offered by four leading nuclear graphite suppliers.

Our rigorous selection process includes testing graphite samples at the High Flux test reactor in Petten, Netherlands owned by the European Union Joint Centre, the European Commission’s science and knowledge service.

We are undertaking an ongoing program of graphite irradiation testing at the Petten reactor for nuclear-grade graphite, advised by recognized industry leaders in graphite performance services.

Engineering services.

Our planned supply of services to an IMSR Plant spans its full project lifecycle, providing an anticipated 60+ years of revenue opportunity.

We expect that these engineering services will provide:

(i) assistance with regulatory applications;

(ii) project management and component procurement before and during construction;

and (iii) operations and maintenance support during operation, including for IMSR Core-unit replacement management and fuel management.

A pivotal development in our IMSR Plant project execution strategy is the timely selection of experienced engineering, procurement and construction firms with demonstrated nuclear power plant detailed design, construction, and large-scale procurement capabilities.

Nuclear fuel supply.

We are engaged with suppliers including Springfields Fuels Limited, a Westinghouse subsidiary, to establish production capabilities for key IMSR Fuel Salt elements, including SALEU, with the scale to support a fleet of IMSR Plants operating in the 2030s.

To provide supply chain resilience, we have engaged with other fuel vendors for similar services, and with those offering fuel transport packaging and shipping services, unenriched uranium supply, and enrichment services.

A major differentiator of the IMSR Plant among other competing Gen IV technologies, including those using MSR technology, is its use of SALEU as nuclear fuel.

This is the enrichment standard of fuel for nuclear plants using legacy nuclear technology and has been in use for many decades.

To our knowledge, almost all of the other competitive nuclear technologies in commercialization today — those capable of supplying high-temperature thermal energy — use HALEU.

Commercial HALEU production requires the construction and licensing of entirely new enrichment facilities as current facilities cannot be converted to HALEU production.

Prior to the Ukraine conflict, many of our competitors anticipated sourcing HALEU from Russian sources, which was the only known source of commercial supply.

As a result of changing geopolitical factors, the U.S.

government has funded pilot programs in onshore HALEU production, but it is currently available only in small test quantities.

We believe our fuel choice for the IMSR Plant aligns our product with existing fuel suppliers and fuel supply regulatory frameworks for production and transportation, potentially enabling earlier commercialization of our IMSR Plant and reducing the development and supply chain risks associated with restricted fuel types such as HALEU.

In our view, the use of SALEU may also help mitigate policy and regulatory uncertainties in key markets.

The table below summarizes certain technical attributes and specifications of our IMSR Plant design.

IMSR Plant attribute

Specification

Liquid fueled molten salt

Neutron Spectrum

Reactor Thermal Output, gross

Power Plant Electrical Output, net

Thermal Efficiency (net)

44% for normal electric power configuration

Reactor Operating Pressure

Near Atmospheric

Temperature of thermal supply

585°C/1,085°F

Fuel and coolant salt eutectic (Fuel Salt)

Common Fluoride Salts with UF 4 – No beryllium or isotopically enriched lithium

Initial Fuel Enrichment

Less than 3% SALEU

IMSR Plant attribute

Specification

Make-up Fuel Enrichment

Less than 5% SALEU

Reactor Vessel Diameter (Core-unit)

Reactor Vessel Height (Core-unit)

Core-unit Design Life

Replaced every 7 years

On-power make-up fuel added during reactor operation.

Plant Operating Life

IMSR Plant land footprint with the Thermal and Electricity Facility designed for electricity generation only

6.4 hectares/16 acres

Design, testing, and development status

We have developed an engineering program to advance the timely, safe and efficient evolution of the IMSR Plant within a controlled engineering environment.

Our engineering program develops the design requirements and specifications of the Structures, Systems and Components that make up the IMSR plant.

It employs advanced software and engineering methods used in the highly regulated aviation industry for document and design control, which we believe express best practice.

During the CNSC’s Vendor Design Review (“VDR”) of the IMSR Plant design, the CNSC reviewed our engineering program and concluded that it was aligned to CNSC requirements for controlled development of a nuclear plant design.

Our engineering program consists of five distinct phases — Conceptual Engineering, Basic Engineering, Detailed Engineering, Operations Support and Decommissioning.

Conceptual Engineering, which laid the foundation for the IMSR’s nuclear systems, was completed in 2017 coincident with the first major regulatory milestone, the CNSC Vendor Design Review Phase 1.

Basic Engineering was started immediately, and it developed safety and design requirements of the IMSR Plant, computer models for process systems and engineering of plant interfaces such as the relationship between mechanical and electrical systems of the IMSR Plant’s Nuclear Facility.

This work facilitated CNSC’s VDR Phase 2 process.

We considered the Basic Engineering phase complete in April 2023 when CNSC concluded its VDR and issued its Phase 2 report.

We are currently in the Detailed Engineering phase where design focus has moved from the system level to components and the performance requirements for integrated systems, including the requirements for their manufacture, construction and operation.

This is an important undertaking to ensure plant economics are achieved.

Our engineering program is designed to coordinate with the scope and timing of elements of our R&D and testing program, as well as our supply chain development activities.

Our objective is to ensure that we are able to validate & verify and qualify systems and materials with data secured from accredited R&D and testing counterparties to support our engineering program.

We have progressed the engineering of the IMSR Plant’s Structures, Systems and Components to the Detail Engineering phase.

The completion of Detailed Engineering requires that we have R&D and test data to support Operating License applications with nuclear regulatory authorities.

We have advanced the engineering program of our IMSR Plant to complete the CNSC VDR, which reactor developers can complete during the design process if the applicable criteria are met.

We believe that the conclusion of the CNSC’s VDR as well as the co-incident inter-agency CNSC-USNRC review to be a positive reflection of our engineering program, R&D and testing program, and the status of our IMSR Plant design.

Our engineering and R&D and testing programs are facilitating the preparation and submission of technical material to the USNRC supporting our pre-application engagement.

Our R&D and testing program has specified detailed individual tests that we need to undertake to qualify our materials, including our graphite moderator;

those tests have been underway since 2020 at the NRG Petten reactor in the Netherlands and given us a deep understanding of graphite performance.

Our R&D and testing program has specified the individual tests to qualify our IMSR Fuel Salt.

While many tests have already been undertaken and are complete, giving us a deep understanding of graphite/fuel salt and alloy/fuel salt interactions, our program for IMSR Fuel Salt qualification is continuing.

We have developed a comprehensive code validation & verifications strategy, which is being implemented in part through U.S.

DOE-funded projects targeting validation & verifications of physics and thermal-hydraulics computational models.

We intend to build and operate test rigs that will deliver the data to validate and verify our key models for IMSR fission power control and heat transport.

We consider all these activities to be typical for the design and licensing a fission reactor for commercial use.

Our engineering program has progressed our IMSR Plant design to a Preliminary Safety Analysis Report (PSAR) standard, a recognized development status of nuclear plant design in the nuclear industry.

While we believe the status of our IMSR Plant design process to be satisfactory for an IMSR Plant project to secure a Construction Permit, this process must be substantially complete for an Operating License application and expressed by a Final Safety Analysis Report for our IMSR Plant design.

Regulatory Matters

Regulatory strategy and engagement

Our regulatory strategy has been a central element of our commercialization plan since the Company’s inception.

Its objective is to establish the IMSR Plant as licensable and deployable by the plant’s owner-operator in key global markets, starting with the United States and Canada.

We have structured our regulatory engagement to reduce commercial and development risks, which includes our objective to align to the greatest extent we can with existing regulatory frameworks, particularly in the United States and Canada.

This approach supports strategic entry in other markets based on jurisdictional readiness and market demand.

The nuclear power industry in the United States is subject to extensive regulation by the USNRC and in Canada by the CNSC, which oversees licensing, safety, environmental impact, and decommissioning.

Compliance with USNRC/CNSC regulations is mandatory at all stages of nuclear plant project development and operation, and regulatory approvals can significantly impact project timelines and costs.

Additional oversight may come from federal, state/provincial, and local authorities, particularly concerning environmental and construction permits.

Our regulatory strategy has focused on early, collaborative engagement with regulators to develop our IMSR Plant design under regulator-informed conditions.

Its intention is to reduce development risk, enhance commercial readiness, and establish a clear pathway for the deployment of the IMSR Plant by future owner-operators in key global markets.

Importantly, as noted above, our Company does not intend to act as the licensee, owner, or operator of IMSR Plants.

Our business model is based on the supply of nuclear reactor systems, fuel, and engineering services to owner-operator customers who are responsible for securing all necessary regulatory approvals.

As such, our regulatory engagement is focused on providing a technology and design foundation that can support third-party licensing activities without requiring Terrestrial Energy itself to hold construction or operating licenses.

This model reduces our direct regulatory burden and exposure to project-specific licensing timelines and requirements.

We have prioritized deep, early-stage technical engagement with the CNSC and the USNRC to advance mutual understanding of the IMSR Plant’s design and licensing potential.

This early engagement enables regulators to provide feedback on the design’s alignment with existing regulatory frameworks and expectations well in advance of the submission of any construction and operating license applications.

By investing in this pre-licensing dialogue, we have been able to systematically identify and address potential regulatory challenges, support future applications by owner-operators, and build commercial confidence in the IMSR Plant’s licensability.

Until our successful completion of the Canadian Vendor Design Review (VDR) process described below, we focused on the CNSC regulatory process as it was accessible mid-design to a nuclear plant developer and aligned well with our business objectives.

While we have planned for engagements with any other nuclear regulators, such as the Office of Nuclear Regulation in the United Kingdom, to date we have only engaged with the USNRC and CNSC.

The completion of our engagement with the CNSC in 2023 has allowed us to focus on our USNRC engagement.

In 2019 we were selected by leadership of the USNRC and CNSC for the first-ever inter-agency collaborative cross-border regulatory review of a Gen IV reactor technology;

the review was completed in May 2022.

This joint review assisted with advancing regulatory understanding of our IMSR technology in advance of license applications.

This cross-border regulatory collaboration provided early alignment on reactor design and licensing considerations across both agencies, facilitating future licensing submissions.

In 2016, we requested the CNSC to undertake a VDR of our IMSR Plant design.

A VDR is a pre-licensing programmatic review of a nuclear power plant against Canadian nuclear regulatory requirements for commercial operation and is designed to identify early in the reactor design process any barriers to licensing for commercial use, and to establish commercial confidence in the “licensability” of a nuclear plant design before proceeding to site specific activities.

The scope of the VDR covered design, operation and decommissioning of the IMSR plant.

A completed VDR has historically been required by Canadian owner-operators of nuclear plants before a decision will be made to progress to site-specific licensing activities for a new nuclear plant, as it establishes the “licensability” of the nuclear plant, a critical commercial risk mitigator.

In April 2023, the CNSC completed its VDR of our IMSR Plant design.

Our Company became the first developer of a Gen IV power plant to complete the CNSC’s VDR.

The CNSC issued a public summary report confirming that our IMSR Plant design meets the expectations set out in the 19 focus areas required for licensing, including reactor physics, thermal-hydraulics, human factors, fuel qualification, and decommissioning.

The CNSC concluded that there are “no fundamental barriers to licensing” the IMSR Plant design in Canada for commercial use.

The CNSC defines a fundamental barrier as “a failure to address known issues of safety significance or the use of unproven engineering practices for new or innovative design features (i.e., not adequately supported by analysis, research and development, or both)”.

Consequently, we believe the CNSC VDR completion was a major milestone for our Company and our IMSR Plant commercialization program.

While this does not constitute a regulatory approval of the design in Canada, it has provided us with a detailed understanding of regulatory requirements for licensed operation of an IMSR Plant and commercial confidence that our nuclear plant design, which employs MSR technology, is “licensable” for commercial use in Canada and, by extension, also potentially licensable in other Western markets.

We believe that this is first time in Western markets that a power plant design using MSR technology has been presented to a leading nuclear regulator for a detailed and programmatic regulatory review for commercial use.

The insights gained through the VDR process — including regulator feedback on IMSR nuclear systems, fuel qualification, and safety-related features — are now being directly incorporated into the technical basis for future construction permit and operating license applications.

This improves the completeness and defensibility of our licensing submissions.

In 2017, we started our engagement with the USNRC, entering a pre-application phase of the U.S.

nuclear regulatory process with a program of technical reports, white papers and topical report submissions.

Our USNRC pre-application engagement is guided by our regulator engagement plan, which we periodically update and file with the USNRC.

This plan anticipates that we will seek as applicant 10 C.F.R.

Part 52 Standard Design Approval of the IMSR.

For the FCP IMSR Plant project, we have assumed a 10 C.F.R.

Part 50 licensing process, rather than a 10 C.F.R.

Part 52 process.

A Part 50 process bifurcates the process for licensing nuclear reactors into two steps, one for the Construction Permit and one for the Operating License, whereas the Part 52 combines the approval process for both the Construction Permit and the Operating License into a single application.

The decision to use a Part 50 or 52 process will be made by the IMSR Plant project developer depending on the individual circumstances applicable to a project, which are not determinable at this time.

The USNRC process permits our 10 C.F.R.

Part 52 Standard Design Approval work to be transferred to support a 10 C.F.R.

Part 50 application by the developer of our FCP IMSR Plant project.

By pursuing this pathway, we believe this will accelerate our ability to receive a USNRC approval under Part 50.

We anticipate that our FCP IMSR Plant project will consist of an approximately five-year pre-construction period, concluding with USNRC’s issuance of a Construction Permit to the IMSR Plant project developer, and an approximately five-year construction period, concluding with the USNRC’s issuance of an Operating License to the IMSR Plant project developer.

We anticipate assisting the IMSR Plant project developer with the preparation of the Construction Permit application to the USNRC.

This will require the completion of the IMSR Plant’s site characterization analysis, which covers site water, soil, weather, seismic and other environment datasets.

We also anticipate assisting the IMSR Plant project developer with the preparation of the Operating License application to the USNRC.

An Operating License application will require us to have substantially completed our IMSR Plant design as well as our R&D and testing program, which will achieve the validation & verification and qualification of IMSR plant nuclear systems required for USNRC approval of the Operating License application.

We have assumed a 10 C.F.R.

Part 50 licensing process for an NCP IMSR Plant project.

This is expected to consist of an approximately four-year pre-construction period, concluding with the USNRC’s issuance of Construction Permit to the IMSR Plant project developer, and an approximately four-year construction period, concluding with the USNRC’s issuance of an Operating License to the IMSR Plant project developer.

In addition to its value in supporting licensing efforts in North America, our regulatory engagement with the CNSC and USNRC is also expected to inform future licensing applications in other jurisdictions.

The technical materials, methodologies, and regulatory precedents developed through our VDR with the CNSC and our pre-application interactions with the USNRC are intended to form a core body of licensing support documentation that can be adapted for use by our Company, as well as owner/operators in other national regulatory contexts.

This includes markets such as the United Kingdom, where the Memorandum of Cooperation signed between the CNSC, USNRC, and the UK’s Office for Nuclear Regulation (“ONR”) facilitates trilateral information-sharing and collaborative review of advanced reactor technologies.

We believe this formal regulatory cooperation, along with other multilateral initiatives, will enable the technical and regulatory basis for the IMSR Plant to be more efficiently recognized by regulators beyond Canada and the United States, enhancing the scalability and international deployment potential of our technology.

Given the USNRC’s international leadership in the establishment of nuclear regulatory standards, we believe that design approval by the USNRC will assist with our development and the market acceptance of a standard IMSR Plant design outside of North America, reducing the cost of subsequent regulatory review activities in international markets.

Coordinated with our CNSC VDR engagement, we have engaged with the International Atomic Energy Agency (“IAEA”) as part of our program to ensure compliance with international safeguards for non-proliferation and security of nuclear materials.

We continue to participate in global intergovernmental working groups on Molten Salt Reactor technologies, supporting our goal to establish the IMSR Plant and viable international solution in export markets beyond Canada and the United States.

Environmental, Health and Safety

The IMSR Plant presents known and novel safety, health, and environmental risks with respect to its construction, operation, IMSR Core-unit replacement, IMSR spent fuel and Core-unit storage, and decommissioning.

These activities share risks common to energy-related capital projects, such as construction safety, industrial hazards, and material handling risks.

The IMSR Plant also presents unique risks due to its nuclear fission process and innovative design, including the use of IMSR Core-unit and IMSR Fuel Salt.

We believe many of these risks are mitigated by our design of safety systems for our IMSR Plant and its high inherent safety in operation attributable to our use of MSR technology and our proprietary design of MSR.

By design, during IMSR operation non-gaseous radioactive products and by-products of the fission process are contained in the sealed IMSR Core-unit and immobilized in the IMSR Fuel Salt via strong ionic chemical bonding.

Gaseous fission products are captured safety by a specifically designed “off-gas” system.

The IMSR Fuel Salt from each spent IMSR Core-unit is partially reused in each replacement IMSR Core-unit with the excess fuel salt removed and stored in a spent fuel vault within the plant nuclear containment until decommissioning of the IMSR Plant.

Furthermore, each spent IMSR Core-unit, emptied of IMSR Fuel Salt, is removed to a separate and secure IMSR Core-unit Storage Silo within the reactor building, where it will remain for the life of the plant.

As a result of the IMSR Plant’s spent fuel management process, we do not anticipate the plant requires a separate licensed facility for the interim storage of spent nuclear fuel required by some of our competitors.

Nevertheless, IMSR Plant operations and the related supply chain inherently involve the use, transportation, and disposal of toxic, hazardous and radioactive materials.

The risks of our IMSR Plant and its design features for safe operation were the subject of the CNSC’s formal and programmatic VDR process from 2016 to 2023.

The scope of the VDR covered design, operation and decommissioning of the IMSR Plant.

At the conclusion the CNSC VDR process, the CNSC stated that IMSR Plant design demonstrated compliance with Canadian safety codes and standards and there were no “fundamental barriers” to licensing.

We anticipate supplying the IMSR Plant design for construction, the IMSR Core-unit and IMSR Fuel Salt as well as O&M services.

We expect to have contractual provisions to limit liability to breaches in contracted performance of our IMSR design, components and services.

Although we will not be the owner and operator of an IMSR Plant, we believe the risks from incidents during the operation of a licensing nuclear plant are insurable and furthermore they are underwritten by the Price-Anderson Act, which generally establishes a no-fault insurance-type system in which the first approximately $15 billion is industry-funded as provided for under such Act.

See “Risk Factors — Risks Related to Our Business and Industry — The IMSR Plant involves toxic, hazardous and/or radioactive materials and could result in liability without regard to fault or negligence.”

Research, Development and Testing

Our reactor design process is supported by a comprehensive research and development (R&D) program that works collaboratively with our design teams to integrate rigorous nuclear systems testing, iterative design refinement, and regulatory safety analysis.

Our R&D program, which was reviewed by the CNSC as part of its VDR of the IMSR Plant, spans critical technical areas including reactor materials’ qualification, neutronic and thermal-hydraulic systems’ design and testing, and plant instrumentation.

Our rigorous computer code validation & verification program of major reactor systems, leveraging the availability of U.S.

DOE funding, supports these efforts to verify our neutronics and thermal-hydraulics simulation models against experimental and reference data.

We believe that this R&D integrated design process will reduce time-to-market, achieve regulatory compliance, and provide the technical foundation defining IMSR Plant performance.

In August 2025, our “TETRA” proposal was selected by DOE Office of Nuclear Energy for its Advanced Reactor Pilot Program for Accelerated Development, which targets first criticality by July 2026.

This program was established as part of President Trump’s Executive Order 14301 in May, creating a new DOE pathway to fast-track commercial licensing activities for small and modular nuclear plants that use advanced reactor technologies, expediting their broad deployment.

TETRA purpose and scope is part of our program to prepare for commercial licensing applications.

These applications require that neutronic reactor models, including our neutronic model for the IMSR are verified with reference data collected from a small scale “pilot” reactor and in a manner compliant with NRC requirements for a future commercial operating license application.

We believe our TETRA pilot reactor was selected as it was a direct product of our R&D integrated design process that since its creation in 2013 also integrates the licensing requirements for IMSR plant operation as well as the capabilities of our IMSR plant supply chain;

the former has been deeply informed by our regulatory experiences with the CNSC and the USNRC.

In addition, our TETRA pilot reactor’s target criticality-date benefits from our use of SALEU and the availability of its reactor fuel, as well as the DOE’s willingness to expedite TETRA’s licensed operation using its existing statutory authority, an alternative to the USNRC’s process.

Our testing strategy involves relationships with laboratory facilities that possess the necessary quality assurance programs, technical capabilities, and qualified personnel.

We have cultivated these strategic relationships across a network of facilities spanning North America, Western Europe, and Australia.

Our North American relationships include three U.S.

national laboratories:

Argonne National Laboratory (ANL), Idaho National Laboratory (INL) and Pacific Northwest National Laboratory (PNNL), alongside Canada’s Canadian Nuclear Laboratory (CNL).

In Europe, we collaborate with the UK’s National Nuclear Laboratory (NNL), the European Union Joint Research Centre (JRC) including its NRG Pallas facility in the Netherlands.

Our international reach extends to the Australian Nuclear Science and Technology Organisation (ANSTO).

These relationships are complemented by targeted academic engagements, including with Virginia Polytechnic Institute and State University (Virginia Tech) and Université de Paris, which conduct fundamental research critical to IMSR technological advancement.

We are collaborating with Texas A&M University, a leading nuclear engineering and technology university in the U.S., on a proposed IMSR Plant project at the RELLIS campus in Bryan, Texas.

We have also integrated specialized private sector expertise through partnerships with KSB in Germany for pump technology and Heat Transfer Research, Inc.

(HTRI) in the U.S.

for heat exchanger and thermohydraulic test loop design.

These R&D and testing relationships provide or have provided contracted R&D and testing services with defined scopes of work to us as part of our normal course business activities to develop the IMSR Plant design to license, construct and commercial operation at fleet scale.

Grant awards from the U.S.

DOE, Canadian Federal Government, and UK Government have assisted us with our testing and development activities with these diverse organizations.

Each of our R&D and testing counterparties must be “accredited” and comply with our Quality Assurance program required for regulatory compliance before the start of R&D and testing activities.

These “accredited” and collaborative R&D and testing relationships under agreed scopes of work intend to demonstrate safe operation of IMSR systems and components, a process referred to as “verification & validation” and “qualification.” In parallel, our R&D relationships have supported critical graphite irradiation tests conducted at the High Flux Reactor in Petten, Netherlands.

The first phase of this program has yielded a substantial volume of essential data that demonstrate the performance of our preferred graphite grades at high temperatures under irradiation.

R&D activities also encompass testing, optimization, and scale-up of ANSTO’s liquid fuel stabilization and encapsulation “Synroc ® ” technology.

Synroc is recognized in the nuclear industry as an alternative to vitrification for the management of waste nuclear material.

We believe our activities with ANSTO have demonstrated Synroc ® to be a robust and safe solution for the management of spent IMSR Fuel Salt and its long-term storage.

Parallel advancements have been achieved in the design of neutronics and thermalhydraulic test rigs, and the design of key nuclear components — including primary pumps and primary heat exchangers in the IMSR Core-unit.

These efforts build upon our design expertise in IMSR technology that commenced in 2013 and are complemented by our understanding of regulatory requirements to demonstrate validation & verification and qualification.

IMSR Technology

The IMSR is a design of MSR that operates in the thermal neutron spectrum achieved by a graphite moderator with a fluoride salt eutectic operating as the reactor’s nuclear fuel and its primary coolant.

A MSR is defined by its use of a molten salt — a fluid with high thermal stability that acts as both the reactor fuel and primary coolant — operating in a low-pressure cooling system.

As such, this is a major departure from legacy nuclear technology, which is characterized by solid fuel cooled with high-temperature water, a thermally unstable fluid, which necessitates a highly pressurized active cooling system and almost universally by forced coolant flow from pump action.

We believe that these and other clear and distinct operational differences articulated in this document offer considerable potential for the IMSR Plant to improve safety, economic efficiency, flexibility, and overall commercial value compared to nuclear plants built with legacy nuclear technology and other Gen IV technologies.

We believe that our IMSR Plant can achieve a competitive position in commercial markets due to the distinct characteristics of MSR technology and our application of it within the IMSR Plant design.

Our IMSR Plant has the following operating characteristics that we believe may be fundamental to addressing certain economic challenges associated with legacy and other Gen IV nuclear technologies, such as high-temperature gas reactors (HTR) and sodium fast reactors (SFR).

While high-temperature and low-pressure operation with high inherent safety is characteristic of MSR technology, our IMSR Plant collectively expresses the five characteristics of a small and modular nuclear plant that we believe are essential for commercial success.

These five characteristics differentiate the IMSR Plant from nuclear plant using legacy technology as well as other Gen IV nuclear technologies.

Additionally, as discussed previously, our IMSR Plant uses readily obtained SALEU fuel instead of HALEU.

Figure 4 below sets out the connection between these characteristics and the levelized cost of electricity.

Waterfall chart of LCOE (USD per MWh) and IMSR operating characteristics

High-temperature operation.

The IMSR Core-unit operates at ~700 °C, which facilitates the IMSR Plant’s thermal energy supply temperature for commercial use of 585 °C.

As a result of this high-temperature reactor operation and energy supply, we have calculated the IMSR Plant’s steam turbines to be approximately 44% (net) thermal efficiency for electricity generation, substantially higher than the approximately 30% (net) efficiency typical of steam turbines driven by a SMR using legacy nuclear technology.

Holding all other variables constant, we have calculated that this increased thermal efficiency will lead to a proportionally lower (~32% reduction) in the levelized cost of electricity supplied.

Low-pressure operation.

Unlike legacy nuclear technology and some Gen IV nuclear technologies, which require a primary cooling system pressurized to 60-170 atmospheres, the IMSR’s primary cooling system operates at near atmospheric pressure.

We believe that as a result of avoiding the regulatory safety requirements and engineering complexity of high-pressure operation, the IMSR may allow for simplified containment and systems, which has the potential to reduce manufacturing, construction complexity and cost in U.S., North American and other markets.

Inherent safety in operation.

The IMSR’s use of a thermally stable coolant, which is also the nuclear fuel, has inherent performance characteristics that we believe to be advantageous.

(i) low-pressure reactor operation enabled by the use of a thermally stable coolant avoids the hazards of high-pressure reactor operation;

(ii) the IMSR Fuel Salt dissipates fission heat through a process of convective fluid flow of the fuel, which is not an inherent operating attribute of legacy nuclear technology, this uses a solid fuel;

(iii) our primary means of reactor power control is inherent and facilitated by the IMSR’s strong negative temperature-of-reactivity, rather than with active mechanisms such as mechanical control rods;

and, finally (iv) many of the radioactive products and by-products of the IMSR’s nuclear fission process are captured and contained by the IMSR Fuel Salt via strong ionic chemical bonding.

These mechanisms, which are highly relevant to IMSR safety, are inherent properties of our reactor’s systems and distinct from the mechanisms of reactor safety used in plants built with legacy and many Gen IV nuclear technologies, which typically involve engineered active safety systems.

We believe that economic advantage can be gained from inherent safety.

IMSR innovation

The technological centerpiece of the IMSR Plant is its proprietary IMSR Core-unit.

This is a sealed, replaceable reactor vessel that encapsulates all primary reactor systems.

Each Core-unit contains the IMSR Fuel Salt, graphite moderator, primary heat exchangers, primary pumps, and other systems.

The IMSR Core-unit leverages MSR technology first developed over many decades, starting in 1950s and 1960s, by the U.S.

Department of Energy’s Oak Ridge National Laboratory (“ORNL”), resulting in the benchmark Molten Salt Reactor Experiment (“MSRE”), a prototype MSR that operated successfully for over 13,000 hours.

Subsequent innovations to the MSRE include the Denatured Molten Salt Reactor (“DMSR”) design in 1980 and the Sm-AHTR high-temperature reactor in 2010.

These later designs introduced important advancements such as a once-through fuel cycles using SALEU and cartridge-based core architecture, further enhancing safety and proliferation resistance.

A key challenge to early MSR commercialization efforts was limited lifetime of components in the reactor core, which is exacerbated at the reactor power densities required for a commercial reactor.

Such high-power densities significantly reduce the lifetime of components and particularly the graphite moderator, requiring periodic replacement;

this has the potential to create significant maintenance challenges that must be overcome for industrial use of MSR technology.

We believe our proprietary innovation — the IMSR Core-unit — addresses this maintenance challenge.

The IMSR Core-unit innovation is the integration of the primary reactor components (the graphite moderator, primary pumps, primary heat exchangers, and other components) into a sealed and replaceable reactor vessel;

see Figure 5.

During operating each IMSR Core-unit is housed its Operating Silo and after use a Storage Silo.

This replaceable IMSR Core-unit is designed to mitigate the limited lifetimes of reactor components with a “plug-and-play” component replacement process that operates every seven years and involves the installation of a replacement IMSR Core-unit.

We expect the IMSR Core-unit innovation to streamline maintenance, support operational efficiency, and confer potential safety benefits.

Illustrative rendering of the IMSR Core-unit innovation to facilitate efficient MSR maintenance.

Actual Core-units design, characteristics and appearance may vary materially.

The IMSR Core-unit is designed to be fabricated in a quality-controlled factory-based manufacturing environment and transported to IMSR Plant site for installation in its standardized operating silo.

At the end of each seven-year cycle, the now-spent IMSR Core-unit is replaced with a new one.

IMSR Fuel Salt from each spent IMSR Core-unit is partially reused in the subsequent IMSR Core-unit and the remainder is removed and stored in a spent fuel vault inside the plant’s nuclear containment structure until decommissioning of the IMSR Plant.

Each spent IMSR Core-unit, emptied of IMSR Fuel Salt, is stored in a separate and secure IMSR Core-unit Storage Silo within the Nuclear Facility, where it will remain until decommissioning of the IMSR Plant.

As a result of the IMSR Plant’s distinct operating characteristics, we believe that it will offer improved affordability and cost-competitiveness of nuclear energy supply relative to new nuclear plants built with legacy and other Gen IV nuclear technologies, and in doing so, address the economic obstacles to the deployment of new nuclear plant and the expansion of nuclear supply to meet demand.

Intellectual property

The MSR was invented in the 1950’s and its key innovation — the nuclear fuel and coolant combined into single molten salt eutectic — was successfully demonstrated by a graphite moderated thermal spectrum MSR in the 1960s at the U.S.

Department of Energy’s Oak Ridge National Laboratory and subsequently improved upon.

However, the long-standing design challenge to commercialization of a graphite moderated thermal spectrum MSR remained graphite’s limited lifetime in the reactor core operating at the high-power densities of commercial power reactor, and the high complexity and challenging safety requirements of maintenance protocols for its replacement along with other primary reactor components during plant operation.

The Company’s key MSR innovation, which solves for this maintenance challenge, is the IMSR Core-unit.

This component integrates the primary reactor systems (for example the reactor vessel, graphite moderator, primary molten salt pumps and primary heat exchangers) into a swappable and replaceable reactor module.

We believe the swappable and replaceable IMSR Core-unit design addresses not only the limited lifetimes of all primary reactor system components, include the graphite moderator, but does so with a simpler and safer maintenance protocol and enables the high reactor power density and high plant capacity factors necessary for capital efficiency and successful commercial use.

Our intellectual property strategy is designed to establish and maintain a defensible portfolio of patents, trademarks, trade secrets, and proprietary know-how related to the IMSR Plant and its key systems and components, including the IMSR Core-unit.

This strategy is designed to safeguard our technological leadership and support our business objectives.

We seek to protect key innovations through targeted patent filings in jurisdictions primary to our business and regulatory strategy, including the United States, Canada, the European Union, China, and Japan.

Our IP protections cover the IMSR Core-unit innovation.

We currently have approximately 90 patents granted or pending across six invention families, of which approximately 84 are granted, 5 pending, and 8 are Patent Cooperation Treaty applications.

These patents include both broad and narrow claims that collectively create significant barriers to entry around the IMSR technology, which may discourage or prevent replication of our technology by competitors.

Our patented technology is distinct from MSR technology in the public domain.

While we have built on public domain MSR research, other developers are employing public domain MSR technology in different ways, creating different MSR designs.

During the tenor of our patents, we believe that these developers will have to find alternative solutions to the operational maintenance challenges from limited materials’ lifetimes of MSRs that our IMSR addresses in the jurisdictions where we benefit from that patent protection.

We are not presently aware of infringing technologies.

Accordingly, our IMSR technology is proprietary and not available for public use, and we will license it in the course of our operations to the extent commercially necessary to owners and operators of IMSR Plants.

We do not license our IMSR technology from third parties;

it is our proprietary design.

Our patent families cover innovations such as:

the IMSR Core-unit with multiple independent heat exchangers for redundancy and safety in operation;

neutron fluence control;

pneumatic motor assemblies;

a nuclear core design;

thermal storage;

and method patents.

Patents and descriptions in these extended families are (i) Integral molten salt reactor (US 10056160), (ii) Pneumatic Motor Assembly, Flow Induction System Using Same And Method Of Operating A Pneumatic Motor Assembly (US 2018/0258829), (iii) Molten salt nuclear reactor (US 2014/0023172), (iv) Cooling system for nuclear reactor (US 2022/0375635), (v) Power Plant system (US 11756696), (vi) Molten Salt Nuclear Reactor (US 11,200,991).

Filing dates of patents granted or in the process of prosecution range from 2013 to 2023, with and the correlative expiry dates are accordingly 2033 to 2043.

We also generally maintain trade secrets for design and engineering elements where disclosure is not commercially advantageous and regularly evaluate this balance.

The trademark “IMSR” is registered in Canada and the UK and used as an unregistered mark in the United States.

Commercialization Pathway

In response to evolving market demand for our IMSR Plant, we have a pipeline of over ten early-stage IMSR Plant projects each at an identified site.

We play an active role in the establishment of each project and its member consortium.

Our portfolio of early-stage projects covers a range of industrial sectors such as mining, chemical and petrochemical production, data centers, and grid power provision.

Our near-term project milestones include the completion of site characterization work, which is the antecedent to the project’s submission of a USNRC Construction Permit application.

We expect these collaborative industry relationships to support the growth of our project pipeline with additional IMSR Plant projects.

Illustrating this approach to IMSR Plant project development from the formation of its initial consortium, we have announced developments with consortia members and projects over the last 12 months with industrials, suppliers, research partners, and site owners, such with Schneider Electric, Zachry Group, Viaro Energy, Energy Solutions, Texas A&M University and most recently Ameresco.

To illustrate further, our Texas A&M project consortium consists of an EPC, a nuclear utility, the site owner, a nuclear fuel supply, and other suppliers.

The IMSR Plant project at the RELLIS campus site with an attendant consortium was proposed by Terrestrial Energy following Texas A&M University’s competitive RFP process in the third quarter of 2024.

Terrestrial Energy was one of four companies selected by Texas A&M in the fourth quarter of 2024 to collaborate with Texas A&M on SMR projects at the RELLIS campus site.

Terrestrial Energy and its project consortium partners intend to pursue licensing, construction, and operation of the IMSR Plant at the RELLIS campus site, subject to regulatory approvals and financing.

This plant is intended to supply clean, firm power to the campus and to the ERCOT grid.

Our collaboration with Texas A&M University has the potential to accelerate our business plans and aligns with recent policy statements supporting commercialization of advanced nuclear technologies by the Trump Administration, and U.S.

Federal and Texas state governments.

As noted above, on August 12, 2025, the Company announced that it had been selected for the DOE’s Advanced Reactor Pilot Program, which we believe represents a significant milestone in Terrestrial Energy’s commercialization pathway, leveraging the program’s fast-track approach to advance the licensing and deployment of the Company’s proprietary IMSR technology.

Government support and financing

The IMSR Plant development has benefitted from multiple grant awards totaling approximately $30 million in non-dilutive funding support from the governments of the United States, Canada, and the United Kingdom for licensing, engineering, and fuel supply activities.

Department of Energy’s Loan Programs Office (“LPO”) has accepted a loan guarantee application for up to $890 million to support project financing of an IMSR Plant in the United States.

The application included a project plan and supporting technical, regulatory, and financial materials, in accordance with the LPO’s review requirements.

As of the date of this filing, our application is under review with the LPO.

If approved, the loan guarantee may help reduce project financing risk, enhance investor confidence, and improve project viability.

However, acceptance of an application does not imply regulatory approval or project endorsement.

Furthermore, no assurance can be given that such funding will be approved or disbursed.

Our competitors are other electricity and thermal generation technologies, including those used for traditional baseload electricity and industrial thermal power production.

They include fossil fuels, renewables such as hydroelectric, wind and solar with storage, and other nuclear technologies.

We believe our competitive strengths differentiate us from our competition.

Traditional Baseload.

According to the U.S.

Energy Information Agency’s (“EIA”) International Energy Outlook, approximately 83% of global primary energy demand (and approximately 66% of global electricity generation) was forecasted to be met by coal, natural gas, petroleum, and large-scale nuclear in 2025.

These technologies are highly reliable, cost-effective, dispatchable and land-use efficient.

However, except for traditional large-scale nuclear, these resources are carbon-intensive, and we expect them to largely be replaced with carbon-free generation over time.

Traditional large-scale nuclear power plants, while carbon-free, require significant upfront capital expenditures, have a history of extensive construction times, complex safety systems and do not have viable business cases apart from utility-scale generation.

We believe our IMSR Plant contain all of the positive attributes of traditional baseload and addresses many of the commercial limitations of legacy nuclear power plants.

Industrial Thermal Power Production.

At present there is no viable source of industrial thermal power production other than from the combustion of fossil fuels.

Such methods are carbon intensive and subject to the commercial risk of commodity price volatility.

We believe our IMSR Plant offers a valuable solution to many customers seeking low-carbon intensity industrial heat production to maintain their businesses.

According to the EIA’s International Energy Outlook, approximately 17% of global primary energy demand in 2025 was forecasted to come from renewable power generation sources.

Although these sources generate carbon-free power, wind and solar are highly intermittent and non-dispatchable, and hydroelectric is often seasonal and subject to curtailment.

Additionally, since renewables are weather-dependent, they are too unreliable to support certain end-use cases, including mission-critical applications or industrial applications that require extensive on-site, always-available power.

Legacy Nuclear Technology.

Legacy nuclear power plants face fundamental economic and technical constraints that limit their competitiveness in the current and future energy landscape.

These plants are characterized by high capital costs, prolonged construction timelines, and low thermal and by extension capital efficiency, often resulting in levelized costs of electricity that are uncompetitive without significant public subsidy.

As a result, we believe that new projects based on legacy nuclear technology are unlikely to be commercially viable on a standalone basis and are poorly suited to meet modern demands for distributed, flexible, and cost-effective clean energy.

Other Advanced Nuclear Reactors.

There are a number of reactor technologies that are in various stages of development, such as high temperature gas reactors, sodium fast reactors, molten salt reactors, fusion technologies and others.

These technologies, like ours, are designed to be clean, safe and highly reliable.

However, the commercial operation of plant with these technologies has not received regulatory approval in the United States, and many of the technologies have not been commercially demonstrated nor have commercial scale fuel supply infrastructure.

We have offices in Charlotte, North Carolina and Oakville, Ontario.

Our office in Charlotte is our corporate headquarters and consists of office space for our executives and to expand our U.S.

engineering, operations, sales and corporate functions.

We expect our office in Oakville will continue to provide engineering and R&D support as well as expertise relevant for developing Canada IMSR Plant projects.

Export Controls

Our business is or will be subject to, and complies with or will comply with, U.S.

and Canadian nuclear export and import control regimes.

We are required to comply with stringent regulations administered by the DOE, the USNRC, the Bureau of Industry and Security within the U.S.

Department of Commerce (“BIS”), and the CNSC.

These regulations are designed to protect national security, advance foreign policy and non-proliferation objectives, and control the transfer of nuclear-related materials, technology, and services.

Under DOE regulations at 10 C.F.R.

Part 810, the export of certain nuclear-related technology and the provision of technical assistance by U.S.

persons to foreign nuclear programs require prior authorization or reporting.

These controls apply to a broad range of technical exchanges and commercial activities, including design, engineering, consulting, and training services associated with nuclear reactor technology.

Not all exports require a license;

for example, exports of Part 810-controlled technology to Canada are only subject to reporting requirements.

The USNRC regulates the physical export and import of nuclear materials and equipment under 10 C.F.R.

Part 110, including reactor components, source and special nuclear material, and related commodities.

Exports may require specific licenses depending on the destination country and nature of the item;

exports of major nuclear equipment and nuclear material from the U.S.

also require there to be a bilateral nuclear cooperation agreement (known as a “123 Agreement”) between the United States and the end-user country before the export license can be granted.

As of July 11, 2025, the United States has twenty-five (25) 123 Agreements in force.

These agreements cover 48 countries, as well as the IAEA and Taiwan.

All of our current markets are covered by Section 123 Agreements.

Further, exports of minor reactor items are subject to a general license and don’t require advance approval from the USNRC.

The BIS, through its Export Administration Regulations (“EAR”), oversees the export of “dual-use” items — goods and technologies that have both civilian and military or strategic applications.

Certain components, software, and supporting technologies related to nuclear operations may fall under EAR controls depending on their classification and end use.

Exports of IMSR items subject to the EAR generally don’t require a license from the BIS.

In Canada, the CNSC administers export and import licenses under the Nuclear Non-Proliferation Import and Export Control Regulations (‘NNIECR”).

These regulations control the cross-border transfer of nuclear and nuclear-related dual-use items, including reactor technologies, fuel cycle components, and technical data.

Exports from Canada may require CNSC authorization if destined for countries outside of Canada, including the United States, depending on the item and its strategic classification.

Licenses are typically issued within 15 business days.

Collectively, these export and import control frameworks impose compliance obligations on our business operations.

government agencies responsible for administering the nuclear export control regulations have a degree of discretion interpreting and enforcing these regulations.

These agencies also have significant discretion in approving, denying, or instituting specific conditions regarding authorizations to engage in controlled activities.

However, as noted above, many of the exports related to the IMSR in our target market will not require specific licenses.

We have IMSR technology and proprietary technology information that was developed and is owned by our Canadian subsidiary;

this information is subject to CNSC export control of nuclear technology.

It includes elements of the IMSR Plant design that was submitted to the CNSC for its VDR of the IMSR Plant.

We have obtained requisite export licenses when required from the CNSC to export this technology including its export to our U.S.-domesticated company.

We anticipate that our U.S.

operation will provide a substantial part of the remaining engineering work to complete of the IMSR design for U.S.

and export market deployment.

We have also reported to the DOE the export of nuclear technology to our Canadian operations, which was generated from our U.S.

activities and engagements with U.S.

laboratories for R&D and testing of IMSR nuclear systems.

Collectively, these export and import control frameworks impose extensive compliance obligations on our business operations.

As we pursue international commercial opportunities for our IMSR Plant and engage with cross-border development partners, we will continue to maintain internal policies and compliance mechanisms designed to ensure adherence to all applicable regulatory requirements.

Our ability to obtain and maintain the necessary authorizations from the DOE, USNRC, CNSC, and other regulatory bodies may impact the timing and scope of our commercialization efforts in various jurisdictions.

Human Capital

As of December 31, 2025, we were headquartered in Charlotte, North Carolina and employed 74 full-time employees.

The Company has a seasoned leadership team with extensive experience in the nuclear industry and adjacent industries.

In managing our team, we focus on employee recruitment, retention, developing a pipeline of talent, and tracking progress against our performance objectives.

Available Information

We were originally a special purpose acquisition company incorporated on April 4, 2024, as a Cayman Islands exempted corporation whose business purpose was to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

On October 23, 2025, we domesticated into a Delaware corporation and changed our name to “Terrestrial Energy Inc.” Our principal executive office is located at 2730 W.

Tyvola Road, Suite 100, Charlotte, NC 28217.

Our telephone number is (646) 687-8212.

Our website address is https://www.terrestrialenergy.com/ .

Information contained on our website is not a part of this Form 10-K, and the inclusion of our website address in this Form 10-K is an inactive textual reference only.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the investor relations page of our Internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S.

Securities and Exchange Commission (the “SEC”).

Our Internet website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business