REalloys Inc.
11/13/2026 | Press release | Distributed by Public on 11/13/2026 05:04
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, the unaudited Condensed Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q ("Form 10-Q"), and the Consolidated Financial Statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Current Report on Form 8-K/A filed on May 12, 2026, and in Blackbox's Annual Report on Form 10-K for the year ended December 31, 2025 ("Form 10-K"). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under "Part II. Item 1A. Risk Factors" and elsewhere in this Form 10-Q, "Part I. Item 1A. Risk Factors" and elsewhere in our Form 10-K, "Part I. Item 1A Risk Factors" and elsewhere in our Form S-4 (File No. 333-286507). See also "Cautionary Note Regarding Forward-Looking Statements."
Cautionary Note Regarding Forward-Looking Statements
Certain statements made in this report, as well as oral statements made by the Company from time to time, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Readers can identify these forward-looking statements by our use of the words "expects," "anticipates," "estimates," "potential," "believes," "projects," "intends," "plans," "aims," "will," "may," "shall," "could," "should," "opportunity," "goal," "objective," "target," "milestone" and similar words and other statements of a similar sense. These statements are based on our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given. These forward-looking statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) the impact of competitive pressures; (2) the inability to attract and retain skilled employees and effectively plan for succession, while maintaining our unique corporate culture; (3) economic, political, and other risks; (4) the challenges in integrating and achieving expected results from acquired businesses; (5) uncertainty surrounding our future capital needs; (6) information security breaches and other cybersecurity threats; (7) the failure to comply with laws or regulations relating to data privacy, data protection, AI, or other automated technologies; (8) challenges in accurately forecasting our financial results due to seasonal and cyclical variations in customer purchasing patterns and economic and market volatility; (9) potential impairment charges with respect to our investments or acquired intangible assets; (10) exposure to additional tax liabilities, increases and fluctuations in our effective tax rate, and other tax matters; (11) business disruptions from natural or man-made disasters, public health crises, or other events outside our control; and (12) stock price volatility.
Unless the context requires otherwise, "REalloys," the "Company," "we," "us" and "our" refer to REalloys Inc. and its consolidated subsidiaries.
Company Background
REalloys is a U.S.-based rare earth minerals and materials company building a vertically integrated North American "mine-to-magnet" supply chain serving U.S. Protected Markets and broader commercial markets, including defense, aerospace, automotive and EV, energy, electronics and advanced industrial applications. Our strategy is to control the stages of the supply chain where capacity outside China is most limited and where we believe most of the value is created: separation, metallization and magnet manufacturing. We intend to secure feedstock through offtake arrangements for both primary raw materials and secondary (recycled) materials. We are using our arrangements with the Saskatchewan Research Council as a near-term source of separated rare earth materials for our metallization plant under construction, while we develop our own separation capacity in the United States.
Rare earth elements, principally neodymium, praseodymium, dysprosium, and terbium, are what give high-performance permanent magnets their strength and their ability to hold that strength at high temperature. Neodymium and praseodymium provide the raw magnetic power; dysprosium and terbium provide the coercivity, the resistance to demagnetization, that keeps a magnet working in the heat of a jet engine bay or an electric motor. Those magnets are what turn electricity into motion, and they sit inside almost anything that moves electrically: missile and aircraft actuators, radar and sonar systems, electric vehicle drivetrains, robotics, wind turbines, medical imaging equipment, among other mission-critical applications. Supply of these materials is concentrated in China, and the U.S. Department of Defense will be prohibited from procuring covered magnets containing rare earths sourced from adversarial nations beginning January 1,
2027. Our strategy is to give U.S. and allied customers a secure, transparent and traceable alternative located entirely in North America.
We operate through two principal subsidiaries:
•Strategic Metals Development Corp. ("Strategic Metals") holds a 100% interest in the Hoidas Lake Project, an exploration-stage rare earth property in northern Saskatchewan comprising 14 contiguous dispositions over approximately 12,522 hectares. The property is enriched in the magnet rare earths neodymium and praseodymium. Historical reports referenced 963,808 tonnes of measured, 1,597,027 tonnes of indicated and 2,560,835 tonnes of inferred mineralization; these historical estimates are not classified as mineral resources or reserves under S-K 1300, and economic viability has not been established.
•PMT Critical Metals Inc., acquired on March 31, 2025, operates the Euclid facility, which produces rare earth metals, alloys and NdFeB magnet materials for customers including the U.S. Defense Logistics Agency, the U.S. Department of Energy's Ames National Laboratory and industrial magnet customers.
Recent Developments
U.S. Army Enhanced Use Lease Opportunity, Tooele Army Depot
On November 3, 2026, we announced that we and the Department of the Army had executed a term sheet (the "Term Sheet") setting out the principal terms for negotiating a definitive Enhanced Use Lease ("EUL"). The Term Sheet follows our June 25, 2026, conditional selection for exclusive negotiations toward a long-term EUL at Tooele Army Depot in Utah. The Term Sheet is non-binding, except for provisions on governing law, expenses, and confidentiality, under which our reimbursement of the Army's administrative expenses before EUL execution is capped at $50,000.
The Term Sheet describes a facility on approximately 200 acres to process and refine target critical minerals, including dysprosium and terbium. The parties may add other rare earth elements by mutual agreement. The final scope has not been agreed and may not include additional elements or downstream manufacturing.
The principal indicative terms are:
•Term: an initial term of 50 years, with one 25-year renewal subject to Army consent.
•Rent: fair market value base rent plus participation rent beginning at the earlier of commercial production or 2.5 years after EUL execution. The rate and basis of the participation rent have not been agreed. The Army may elect to receive rent payments as in-kind consideration.
•Costs and liabilities borne by us: environmental review, permitting, utilities, site infrastructure, security, and environmental liabilities from our operations.
•Decommissioning security: financial security for estimated decommissioning costs.
•Offtake: an Army right of first offer on facility output.
EUL execution is subject to several conditions:
•Agreement on rent;
•Army acceptance of our development plan;
•Completion of environmental reviews, including the National Environmental Policy Act ("NEPA") review;
•Adequate permit capacity;
•Project financing;
•Approval by our Board of Directors;
•Required Army determinations and Congressional notifications.
If these conditions are not satisfied or waived within 18 months, either party may terminate the Term Sheet. We continue to advance the project toward a definitive EUL, which cannot be executed until key conditions precedent are satisfied. As of September 30, 2026, we had not committed capital to the site or incurred material costs related to the opportunity. We expect to expense pre-lease costs as incurred
Executive and Board Leadership Changes
During the second quarter of 2026, the Company announced changes to its executive leadership and Board of Directors, including Robert Winspear's resignation as Chief Financial Officer and the appointment of Craig Cunningham as Chief Financial Officer and principal financial officer, effective June 24, 2026. The Company also announced Joseph
Sawyer's resignation from the Board, effective June 29, 2026. Effective July 1, 2026, Mr. Sawyer transitioned into a project management role to support the execution of the Company's strategic development initiatives.
Effective September 1, 2026, the Company appointed Dr. Muhammad Imran as its Chief Operating Officer, bringing more than 17 years of experience at the Saskatchewan Research Council ("SRC"), most recently serving as Chief Technology Officer and Vice President. Since 2020, Dr. Imran has led SRC's Rare Earth Element Division, playing a key leadership role in developing SRC's Rare Earth Processing Facility in Saskatoon, Saskatchewan, including advancing rare earth separation, metallization, and processing technologies from development through commercialization. Dr. Imran holds a Ph.D. and Master of Applied Science in Chemical Engineering, an executive MBA, and Chartered Director Certification (C.Dir.). As Chief Operating Officer, Dr. Imran oversees the Company's engineering and processing activities, capital project execution, technology scale-up, and supply-chain development, including coordination of the Company's ongoing processing and metallization projects with SRC.
Development and Capital Projects Update
We continued to advance our Phase 1 strategic initiatives - development and expansion of rare earth processing and metallization capabilities.
Capital Project Milestones
We are advancing engineering and equipment procurement for our planned Heavy Rare Earth Metallization Facility, with commissioning currently targeted for Q1 2028 and initial operations targeted for H1 2028. The facility is expected to have a targeted annual processing capacity of approximately 50 tonnes of combined Dy and Tb oxide feedstock.
We have initiated our planned funding under the REPF upgrade agreement with SRC. The agreement covers two principal facets:
•An expansion of NdPr metallization capacity. Initial funding has been directed to completion of the NdPr metallization units and represents approximately one-third of the estimated total upgrade budget. Once complete, the NdPr metallization units are expected to provide us with access to near-term North American production capability for NdPr metal.
•An upgrade of the REPF's separation systems to increase production capacity of separated NdPr, Dy and Tb oxides. Release of the remaining funds, which primarily relate to the separation system upgrade, has been deferred to 2027 because that work requires modifications to the facility, and near-term activities remain focused on completing commissioning and commencing operations at the existing REPF. This deferral is not expected to affect our supply of critical materials from SRC, as the existing REPF will continue its planned ramp-up during this period. The systems upgrade is intended to increase annual production capacity up to approximately 525 tonnes of NdPr metal, 30 tonnes of Dy oxide and 15 tonnes of Tb oxide. Funding of the expansion, together with the SRC supply agreement, secures supply rights to approximately 80% of the expanded facility's total output.
We are advancing processing and separation trials using recycled mixed rare earth oxide and mixed rare earth carbonate feedstock through the first half of 2027, with SRC delivering the technical work. This R&D work is intended to generate the data needed to design a scaled-up commercial separation facility in the United States and to support customer qualification, as part of our Phase 2 execution plan. These trials were previously expected to be completed in 2026; the timing has shifted primarily due to feedstock alignment and procurement lead times, and we do not expect the change to affect our broader strategic execution plan.
Our Phase 2 strategic initiative is a wholly owned, U.S.-based platform for rare earth separation, metallization and magnet manufacturing, described under "Phase 2" below.
Phase 1: Expansion of the SRC Processing and REalloys Metallization
Phase 1 is intended to give us a near-term North American position in heavy rare earth metals, the segment where supply outside China is scarcest and where the Department of Defense sourcing restrictions that take effect on January 1, 2027 are expected to increase demand for compliant material. Through SRC, we expect to obtain separated NdPr metal and dysprosium and terbium oxides, and to convert the oxides into metal at the metallization facility we are building. Phase 1 is also expected to provide the process data, operating experience and product samples that support customer qualification and the design of Phase 2.
We are continuing to advance our strategy to develop rare earth separation, purification and metallization capabilities in North America. A key element of this strategy remains our investment in midstream operations through our arrangements with SRC. We are funding the upgrade of SRC's existing Rare Earth Processing Facility (the "REPF"), and the build-out of our commercial-scale heavy rare earth metallization facility, advancing from pilot-scale. Under these arrangements, we have the ability to produce NdPr metal, and have secured approximately 80% of the NdPr metal and Dy and Tb oxides produced at the existing SRC REPF.
The heavy rare earth pilot project is intended to support process development and validation activities and, ultimately, the production of commercial-scale quantities of heavy rare earth metals. The scope is designed to provide technical information necessary to determine processing specifications, equipment configuration, operating parameters, and other requirements for the planned commercial-scale metallization facility.
Under the REPF upgrade arrangement, we are funding two expansions of SRC's capacity: standalone metallization units to produce NdPr metal, and an upgrade of the REPF's separation systems to increase production of NdPr, Dy and Tb oxides. In exchange, we have secured access to NdPr metallization capability (beginning in the first quarter of 2027) and rights to approximately 80% of the REPF's output on a cost-plus basis, giving us a contracted North American source of NdPr metal and separated rare earth oxides. The dysprosium and terbium oxides are intended to feed the REalloys-owned commercial-scale metallization facility we are developing, which would convert them into metal for alloy and magnet materials. We currently expect initial separated oxide production from SRC REPF in the second half of 2027, and dysprosium and terbium metal output from the metallization facility we are building in the first half of 2028.
The SRC arrangements are expected to affect our business, liquidity, capital allocation, operating results, and development timeline. During the nine months ended September 30, 2026, we paid aggregate advances of $16.5 million to SRC, consisting of $11.6 million for the heavy rare earth metallization facility, $3.7 million for the REPF Upgrade, and $1.2 million for process development programs, including the purchase of oxide feedstock. In the three months ended September 30, 2026, we paid $2.2 million million in aggregate toward the Metallization facility and REPF Upgrade, and we continued receiving equipment and other related project services as we advance our work in Saskatchewan. In October 2026, we paid $7.2 million toward the heavy rare earth metallization project.
Future expenditures related to the planned commercial-scale metallization facility may be significant and may vary based on the outcome of the work being executed, engineering requirements, equipment procurement, permitting and safety requirements, commissioning requirements, availability of financing, and our approval of future work programs. We expect that these arrangements will continue to be an important factor affecting our liquidity and capital resources as we advance our processing and metallization strategy.
Phase 2: Advancement of Scaled-Up Rare Earth Processing Facility and Magnet Manufacturing
Based on updated market analysis of rare earth feedstock supply and demand for finished rare earth products, we have revised the scope of our Phase 2 development. Phase 2 was previously planned as a larger-scale facility to process primary and secondary materials into rare earth metals. It is now planned as a stage-gated, U.S.-based platform covering rare earth separation, metallization, and sintered neodymium-iron-boron ("NdFeB") magnet manufacturing, primarily serving U.S. demand, with a target of approximately 3,000 metric tonnes per year of magnet production no later than 2030. We intend to serve primarily defense, automotive and other advanced industrial customers. We believe a broader product range will increase our customer base and diversify our exposure to rare earth element pricing. Accordingly, we believe a significant share of our potential revenue will come from customer-qualified magnet products, which are driven by product grade and performance, achieved through scarce technology and operational skill, rather than commodity prices. Combining separation and metallization with magnet manufacturing could allow us to serve an undersupplied and heavily Chinese-reliant North American magnet market, with domestic, X-china materials.
To reach the estimated 3,000 metric tonnes of magnets, the Phase 2 facilities are targeting annual production of up to 1,250 metric tonnes of neodymium-praseodymium metal, 60 metric tonnes of dysprosium metal and 25 metric tonnes of terbium metal. We are also evaluating opportunities to produce yttrium, samarium and gadolinium oxides, which are critical rare earth materials required in a range of defense and technology applications with markets in North America and beyond. We intend to diversify the sources and types of our raw materials, potentially including the ability to process mixed rare earth carbonates produced from monazite, bastnaesite and ionic clays, as well as recycled magnet oxides and materials recovered from magnet manufacturing waste streams. Central to our purpose, we are focused on securing feedstock produced in the United States and allied jurisdictions, consistent with our existing SRC offtake agreement and development arrangements.
Implementation of Phase 2 will be underpinned by comprehensive research and development and feasibility studies. In the next 12 months we have allocated $10 million to R&D and the technical studies to derive Phase 2's bankable feasibility studies, including cost and development timeline estimates for separation, metallization and magnet manufacturing. Our feasibility work will assess both technical viability, including process flow sheet design and equipment configuration, and economic viability, including total capital and operating costs. We intend for the Euclid facility to serve as our research, development and product qualification base for Phase 2, and we are assessing it as the location for our planned magnet pilot facility. Together, these activities are intended to advance our process and magnet intellectual property and the qualification of our products with customers.
We are evaluating Tooele Army Depot as the site for the Phase 2 facilities. The Term Sheet contemplates a facility initially focused on dysprosium and terbium, and the permitted scope of a definitive EUL may not accommodate all of the planned facilities. We are therefore also evaluating alternative sites.
The scope, cost, timing and ultimate viability of the project depend on, among other things: the execution of a definitive site agreement; permitting and environmental review; the results of our pilot work; equipment procurement and construction; the availability of feedstock on commercially acceptable terms; the qualification of our products by customers; the recruitment of a specialized workforce; and the availability of financing. The capacity figures above are design targets, not commitments, forecasts or guidance.
Euclid Facility Operations
Near-term revenue is generated primarily at the Euclid Facility under short-term service and supply contracts for rare earth metals, alloys and magnet materials. Growth in revenue and operating margin will depend on customer and product qualification, capital investment in equipment upgrades, automation and capacity expansion, feedstock supply, workforce and continued compliance with the requirements applicable to U.S. government and defense customers. In connection with our intent for the Euclid facility to serve as our research and development and product qualification base, efforts toward increasing the facility's NdFeB magnet materials production capacity, which had been estimated to reach 1,000 mtpa by the second quarter of 2027, will remain indefinitely paused. We are also assessing Euclid as the location for our planned pilot-scale magnet manufacturing facility.
Euclid operations continue to deliver metallurgical services and metals, alloys and magnet materials under existing contracts, utilizing existing capacities and have not been affected by the indefinite magnet expansion pause or intent to expand research and develop pilot and product qualifications at the site.
Advancement of the Hoidas Lake Project
The Hoidas Lake Project remains an exploration-stage property. As of September 30, 2026, we had capitalized $50.5 million in related mining property rights, with no amortization recorded as production has not commenced; mineral exploration costs are expensed as incurred. The project is supported by an S-K 1300 Technical Report Summary that includes a Mineral Resource Estimate; however, no Mineral Reserves have been established. Advancing the project toward potential future development will require substantial multi-year expenditures, including additional drilling and metallurgical testing, environmental and engineering studies, Indigenous and community engagement, permitting, and the completion of pre-feasibility and feasibility studies. The timing, scope and outcome of these activities-and the ultimate development decision-will materially affect our long-term financial profile and capital needs.
We are continuing to evaluate further exploration and development opportunities at Hoidas Lake while keeping the claims in good standing. Any decision to advance the project would depend on the results of further technical work, its fit within our broader strategy and the availability of financing.
The Hoidas Lake dispositions require annual exploration expenditures of CDN$15 per hectare in each of years two through ten following staking, and CDN$25 per hectare thereafter. The property is also subject to a 1.8% net smelter return royalty, capped at an aggregate CDN$1.0 million payable quarterly from gross revenue once commercial production is reached.
Public Company and Regulatory Costs
As a Nasdaq-listed reporting company, we expect to incur substantial incremental costs for SEC reporting, Sarbanes-Oxley compliance, internal control over financial reporting, investor relations, D&O insurance, board fees and
external audit, legal and other professional services. Our operations are also subject to U.S. and Canadian laws and regulations governing mining, environmental protection, occupational health and safety, export controls (including defense-related materials and technology) and anti-corruption. Compliance is integral to our cost base; changes in these laws and regulations could materially affect our business.
Commercial Milestones
We expect to commence commercial intake of NdPr metal and Dy and Tb oxides from the SRC in Q3 2027, in line with the facility's targeted production ramp-up and the Company's existing supply arrangements. REalloys continues to evaluate prospective primary feedstock sources under its existing MOUs and other arrangements, with a focus on advancing selected opportunities toward definitive feedstock supply agreements.
Strategic Collaborations
In July 2026, REalloys entered into a non-binding letter of intent with JS Link to evaluate a potential strategic collaboration focused on the development of an integrated North American rare earth permanent magnet platform. Following further evaluation of the opportunity and the Company's current strategic priorities, REalloys is not pursuing a transaction with JS Link at this time. The Company continues to evaluate opportunities to expand its downstream capabilities and establish strategic partnerships that support its integrated rare earth supply chain strategy.
Key Factors and Trends Affecting Our Business
We believe the following factors will significantly affect our future results, financial condition and cash flows. The discussion reflects management's current expectations and is subject to the matters described under "Risk Factors" and "Forward-Looking Statements."
Demand for Rare Earth Materials and Magnets
Magnet rare earths-neodymium, praseodymium, dysprosium, and terbium-are critical inputs for NdFeB magnets used across defense, aerospace, electric and hybrid vehicles, robotics, industrial automation, wind, medical devices and consumer electronics. We expect medium- and long-term demand to grow with electrification, the energy transition, the proliferation of "physical AI" applications and increasing focus on industrial and defense supply chain security.
In recent years, China expanded export controls and licensing requirements on rare earths, rare earth magnets and downstream products, including products containing even trace amounts of Chinese-origin material. The November 2025 U.S.-China trade and economic understanding suspended certain expanded controls and retaliatory measures, but heightened market focus on rare earth supply chain volatility, potential magnet rare earth shortages, price volatility and the strategic value of non-Chinese supply continues. This suspension was for an initial term of one year and was originally scheduled to expire in the fourth quarter of 2026. In November 2026, China announced an extension of these suspensions through January 2027, in connection with an extension of the broader U.S.-China trade understanding. There can be no assurance that the suspension will be further extended or that the suspended controls will not be reinstated, in whole or in part, upon its expiration.
As a North American rare earth company spanning upstream resources at Hoidas Lake and with separation and metallization capacity under development, we believe we are well positioned to benefit from these trends, particularly as U.S. policy, procurement and customer qualification frameworks continue to favor domestic, traceable supply.
Rare Earth Pricing
A price divergence remains between Chinese domestic and ex-China markets for the heavy rare earths, driven by Chinese export controls and limited non-Chinese supply. As of late September 2026, ex-China dysprosium and terbium oxide traded at a substantial premium to Chinese domestic prices, and the divergence was more pronounced still for yttrium.
If sustained, this divergence supports the economics of non-Chinese production, including ours. It is also volatile, sensitive to Chinese policy, and may narrow if controls are relaxed or if non-Chinese capacity comes online faster than
expected. Higher prices can improve the economics of our downstream products, but they also increase our feedstock costs. We do not currently hedge commodity price exposure.
U.S. and Allied Policy and Procurement
U.S. policy continues to support the build out of a domestic critical minerals supply chain through a range of procurement, financing, stockpiling and grant programs. These include the Defense Production Act, the Department of Defense Industrial Base Analysis and Sustainment program, the Department of Energy's Energy Dominance Financing program, the Export-Import Bank of the United States, the National Defense Stockpile and related procurement and grant programs. We are actively pursuing additional government, defense and dual-use customer relationships, and we are pursuing financing under certain of the programs described above, including with the Export-Import Bank.
Policy support is increasingly directed at the midstream and downstream stages of the value chain, where non-Chinese capacity is most limited. The G7 critical minerals declaration of June 17, 2026, sets a target of reducing reliance on any single non-G7 supplier for rare earths and permanent magnets to below 60% by 2030. Government-backed price floor and offtake mechanisms have also emerged in the United States and among allied governments and are intended to improve the bankability of non-Chinese projects by reducing revenue uncertainty. We are not currently a party to any government price floor or offtake arrangement.
Effective January 1, 2027, U.S. Department of Defense procurement restrictions under 10 U.S.C. § 4872 and applicable DFARS provisions prohibit the U.S. Department of Defense from procuring certain covered permanent magnets containing rare earth materials sourced from covered countries. We expect these restrictions to increase demand for the North American rare earth materials and metals we plan to refine and produce. However, securing defense and related contracts and obtaining the necessary supplier qualifications ahead of the effective date remain subject to significant uncertainty.
Changes in administration priorities, appropriations, tariff and trade policy, or program scope could materially affect demand, realized prices and the availability of additional funding for our capital projects.
Midstream Separation and Metallization and Magnet Manufacturing: The North American Gap
China currently accounts for more than 90% of global magnet rare earth separation and refining capacity, a concentration that has across several years (source: U.S. DOE, International Energy Agency, Benchmark Mineral Intelligence). For the heavy rare earths critical to high-temperature magnets, such as dysprosium and terbium, separation capacity outside China is effectively negligible. Midstream and downstream processing, comprising separation, metallization, alloying and magnet manufacturing, rather than mining, has been identified as the principal bottleneck limiting supply chain diversification. Refining capacity outside China would need to increase several-fold beyond currently planned levels to achieve meaningful diversification.
The practical consequence is that new upstream supply alone, does not create supply chain security. Concentrate and mixed rare earth carbonate produced in the United States or in allied jurisdictions must still be separated into individual oxides and reduced to metal before it can be made into a magnet. Absent midstream capacity in North America, that material is routed back through the same processing base the supply chain is intended to diversify away from.
A substantial volume of allied and domestic upstream supply is now advancing toward production. Our response has been to secure access to that material through offtake agreements and development arrangements, as described under "Recent Developments," while concentrating our own capital and execution effort on the midstream stage that is missing in North America.
According to Benchmark Mineral Intelligence, China accounts for about 91% of global NdFeB permanent magnet manufacturing capacity, with global capacity estimated at about 640,000 tonnes in 2026. Established ex-China production remains concentrated primarily in Japan and Germany, while North American capacity remains comparatively limited and is only beginning to scale.
The gap in North American magnet manufacturing is expected to persist despite significant announced investment. Benchmark forecasts U.S. rare earth permanent magnet demand to reach approximately 47,000 tonnes by 2030, compared with domestic manufacturing capacity of only approximately 15,000 tonnes. This implies that planned U.S. capacity would meet only about one-third of projected domestic demand, leaving a substantial need for additional North American production or imported magnets. This gap is particularly important because separated rare earth oxides
and metals do not themselves complete the supply chain; these materials must ultimately be converted into finished permanent magnets before they can be incorporated into electric motors, defense systems and other end-use applications.
Results of Operations
Basis of Comparison
The period-over-period changes presented in the table below are affected by significant changes in the composition of the Company's consolidated reporting entity between the comparative periods. In particular:
The three months ended September 30, 2025, reflect the operations of pre-merger Private REalloys Inc. (the accounting acquirer) together with a full quarter of PMTCM, which was acquired on March 31, 2025. It includes no Blackbox revenue, cost of revenues or operating expenses, because the reverse recapitalization did not close until February 24, 2026.
The three months ended September 30, 2026 include no Blackbox.io operations, as Blackbox.io was deconsolidated on May 5, 2026. The nine months ended September 30, 2026 include 70 days of consolidated Blackbox.io operations (February 25 through May 5, 2026) prior to its deconsolidation. Both periods reflect significant public company and other SG&A costs associated with the Company's ongoing expansion of activity that were not present in the comparative periods.
Accordingly, the period-over-period percentage changes shown in the table below - including the 11% increase in general and administrative expense and the 13% increase in total operating expenses - principally reflect the change in the level of activity, as Blackbox did not have a significant impact on the operations during the quarter.
The Company is in the development stage and has not generated significant revenue during the periods presented. For the three months ended September 30, 2026, operating results were driven primarily by general and administrative expenses, including ongoing non-cash stock-based compensation recognized in connection with the February 24, 2026 reverse recapitalization, director and officer RSU awards, and shares-for-services consulting agreements, together with costs associated with operating as a newly public company.
Compared with the prior-year period, operating expenses increased materially as a result of costs associated with the management and administrative infrastructure required to support the Company's development and growth strategy along with general public company and compliance requirements. The Company also expects continuing expenditures associated with the development of its business plan, including advancement of its mineral property strategy, downstream processing capabilities, and supply chain relationships. As a result, the Company expects to continue to incur net losses for the foreseeable future.
Three Months Ended September 30, 2026, Compared to Three Months Ended September 30, 2025
| Three Months Ended | |||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | $ Change | % Change | ||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
|
Net Revenues
|
$ | 413 | $ | 186 | $ | 227 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Cost of sales | 263 | 168 | 95 | ||||||||||||||||||||
| Software and development costs | - | - | - | ||||||||||||||||||||
| General and administrative | 30,263 | 27,289 | 2,974 | 11 | % | ||||||||||||||||||
| Advertising and marketing | 486 | - | 486 | ||||||||||||||||||||
| Depreciation and amortization | 185 | 68 | 117 | ||||||||||||||||||||
| Total operating expenses | 31,197 | 27,525 | 3,672 | 13 | % | ||||||||||||||||||
| Loss from operations | (30,784) | (27,339) | (3,445) | 13 | % | ||||||||||||||||||
|
Other expense
|
(245) | (1,751) | 1,506 | (86) | % | ||||||||||||||||||
| Net loss | (30,539) | (25,588) | (4,951) | 19 | % | ||||||||||||||||||
Nine Months Ended September 30, 2026, Compared to Nine Months Ended September 30, 2025
| Nine Months Ended | |||||||||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | $ Change | % Change | ||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||
| Net Revenues | $ | 1,923 | $ | 626 | $ | 1,297 | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||
| Cost of sales | 890 | 387 | 503 | ||||||||||||||||||||||||||
| Software and development costs | 68 | - | 68 | ||||||||||||||||||||||||||
| General and administrative | 151,719 | 29,213 | 122,506 | 419 | % | ||||||||||||||||||||||||
| Advertising and marketing | 4,337 | - | 4,337 | ||||||||||||||||||||||||||
| Depreciation and amortization | 177 | 135 | 42 | ||||||||||||||||||||||||||
| Total operating expenses | 157,191 | 29,735 | 127,456 | 429 | % | ||||||||||||||||||||||||
| Loss from operations | (155,268) | (29,109) | (126,159) | 433 | % | ||||||||||||||||||||||||
| Other expense | 18,807 | 422 | 18,385 | 4,357 | % | ||||||||||||||||||||||||
| Net loss | (174,075) | (29,531) | (144,544) | 489 | % | ||||||||||||||||||||||||
Revenue
Revenue for the three months ended September 30, 2026 was $0.4 million, compared to $0.2 million for the three months ended September 30, 2025. The increase of $0.2 million over the comparative period primarily reflects PMTCM's sales of rare earth metals and materials at the Euclid facility, principally under contracts with the Defense Logistics Agency (DLA contract awarded March 2, 2026) and the U.S. Department of Energy's Ames National Laboratory.
Revenue for the nine months ended September 30, 2026 was $1.9 million, compared to $0.6 million for the nine months ended September 30, 2025. In addition to the factors noted above, the increase of $1.3 million over the comparative period primarily reflects an additional quarter of PMTCM's sales as the acquisition was completed on March 31, 2025 and subscription revenue from the Blackbox trading analytics platform prior to the deconsolidation of Blackbox.io as Blackbox was not included in our 2025 results.
Cost of Revenues and Gross Margin
Cost of revenues for the three months ended September 30, 2026 was $0.3 million, compared to $0.2 million for the three months ended September 30, 2025. Cost of revenues for the nine months ended September 30, 2026 was $0.89 million, compared to $0.39 million for the nine months ended September 30, 2025. Cost of revenues for the three and nine months ended September 30, 2026 consist primarily of outsourced direct costs allocated from Powdermet, Inc. under the PMTCM Uses & Services Agreement, representing materials and direct labor costs at the Euclid facility, and for the nine month period only include Blackbox.io cost of revenues (merchant fees, data feeds, and technology costs).
Gross margin for the three months ended September 30, 2026 was $0.2 million, representing a gross margin of 36.3%. Gross margin for the three months ended September 30, 2025 was less than $0.1 million, representing a gross margin of 9.7%. Gross margin for the nine months ended September 30, 2026 was $1.0 million, representing a gross margin of 53.7%. Gross margin for the nine months ended September 30, 2025 was $0.2 million, representing a gross margin of 38.2%.
General and Administrative
General and Administrative expenses for the three months ended September 30, 2026 and 2025 were $30.3 million and $27.3 million, respectively. The increase was driven primarily by $25.3 million of stock-based compensation. Stock based compensation expense included $14.5 million related to RSU and RPSU awarded to members of the Board of Directors, management and executives of the Company and $10.8 million related to shares-for-services consulting awards granted in 2025 and 2026. Excluding non-cash items, G&A was approximately $4.9 million, of professional fees, legal, audit, and other general and administrative expenses.
General and Administrative expenses for the nine months ended September 30, 2026 and 2025 were $151.7 million and $29.2 million, respectively. The increase was driven primarily by $139.2 million of stock-based compensation. Stock based compensation expense included $98.8 million related to RSU and RPSU awarded to members of the Board of Directors, management and executives of the Company and $40.3 million related to shares-for-services consulting awards granted in 2025 and 2026. Excluding non-cash items, G&A was approximately $12.5 million, of consulting costs, professional fees, legal, audit, and other general and administrative expenses.
Management expects to incur significant costs throughout fiscal 2026 related to public company governance, advancement of the Company's Information Technology capabilities and other costs associated with our recent public listing.
Advertising and Marketing
Advertising and marketing expenses for the three months ended September 30, 2026 were $0.5 million, compared to none for the three months ended September 30, 2025. Advertising and marketing expenses for the nine months ended September 30, 2026 were $4.3 million, compared to none for the nine months ended September 30, 2025. These expenses reflect communications and marketing agreements entered following the reverse recapitalization, including costs associated with increasing retail investor awareness of the Company following its Nasdaq listing on February 25, 2026. The Company does not expect advertising and marketing expenses to continue at this level in future periods.
Depreciation and Amortization
Depreciation and amortization for the three months ended September 30, 2026 was $0.2 million, compared to $0.1 million for the three months ended September 30, 2025. Depreciation and amortization for the nine months ended September 30, 2026 was $0.18 million, compared to $0.1 million for the nine months ended September 30, 2025. The expense relates to fixed assets at the Euclid facility, intangible assets acquired in connection with the PMTCM acquisition, and fixed assets of Blackbox following the reverse recapitalization. Blackbox's results were not part of the consolidated operating results in 2025.
Other Income (Expense), Net
Other income (expense), net for the three months ended September 30, 2026 was net income of $0.25 million, compared with net income of $1.8 million for the three months ended September 30, 2025. The components of the period-over-period change are summarized below (in thousands):
| Three Months Ended | |||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | $ Change | % Change | ||||||||||||||||||||
| Impairment of EVTEC investment | $ | - | $ | - | $ | - | |||||||||||||||||
| Change in fair value of contingent consideration | - | (832) | 832 | (100)% | |||||||||||||||||||
| Deferred cash consideration late payment penalties | - | 2,677 | (2,677) | (100)% | |||||||||||||||||||
| Interest income, interest expense and other, net | 245 | (94) | 339 | (361)% | |||||||||||||||||||
| Other income (expense), net | $ | 245 | $ | 1,751 | $ | (1,506) | (86)% | ||||||||||||||||
Other income (expense), net for the nine months ended September 30, 2026 was net expense of ($18.8 million), compared with net expense of ($0.4 million) for the nine months ended September 30, 2025. The components of the period-over-period change are summarized below (in thousands):
| Nine Months Ended | |||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | $ Change | % Change | ||||||||||||||||||||
| Impairment of EVTEC investment | $ | (6,394) | $ | - | $ | - | $ | (6,394) | (100)% | ||||||||||||||
| Change in fair value of contingent consideration | (3,439) | - | 480 | (3,919) | (816)% | ||||||||||||||||||
| Deferred cash consideration late payment penalties | - | (624) | 624 | (100)% | |||||||||||||||||||
| Accretion expense - Series C Convertible Preferred Stock | (9,220) | - | - | (9,220) | 100% | ||||||||||||||||||
| Interest income, interest expense and other, net | 246 | - | (278) | 524 | (188)% | ||||||||||||||||||
| Other income (expense), net | $ | (18,807) | $ | (422) | $ | (18,385) | 4357% | ||||||||||||||||
Net Loss
Net loss for the three months ended September 30, 2026 was ($30.5 million), compared to ($25.6 million) for the three months ended September 30, 2025. The significant increase in net loss was driven primarily by $25.3 million in stock-based compensation recognized in the quarter, as well as higher SG&A and marketing costs following the transition to public company and increased activity related to our strategic projects.
Net loss for the nine months ended September 30, 2026 was ($174.1 million), compared to ($29.5 million) for the nine months ended September 30, 2025. The significant increase in net loss was driven primarily by $139.2 million in stock-based compensation recognized during the nine months ended September 30, 2026, and other expense of $18.8 million primarily resulting from the reverse recapitalization following the merger with Blackbox as well as higher SG&A and marketing costs following the transition to public company and increased activity related to our strategic projects.
Liquidity and Capital Resources
Outlook
As of September 30, 2026, the Company had cash of $116.2 million, and as of the financial statement issuance date of November 13, 2026, the Company had approximately $106.4 million of unrestricted cash. The Company's historical sources of liquidity have consisted primarily of equity financings and sale of common shares. The Company's principal liquidity requirements are expected to consist of funding the development of the Company's rare earth processing and metallization projects, operating losses, SG&A and general corporate costs, and maintenance of mineral properties.
| Key Liquidity Metrics | As of September 30, 2026 | As of December 31, 2025 | |||||||||
| Cash and cash equivalents | $ | 116,182 | $ | 2,824 | |||||||
| Working capital (current assets minus current liabilities) | 123,444 | 31,387 | |||||||||
| Accumulated deficit | (255,200) | (81,125) | |||||||||
| Total stockholders' equity | $ | 177,633 | $ | 35,834 | |||||||
The following table summarizes our cash flows (in thousands):
| Three Months Ended | |||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | $ Change | % Change | ||||||||||||||||||||
| Net cash used in: | |||||||||||||||||||||||
| Operating activities | $ | (5,711) | $ | (1,929) | $ | (3,782) | 196 | % | |||||||||||||||
| Investing activities | (464) | (43) | (421) | 979 | % | ||||||||||||||||||
| Financing activities | - | 1,767 | (1,767) | (100) | % | ||||||||||||||||||
| Net change in cash and cash equivalents | $ | (6,175) | $ | (205) | $ | (5,970) | 2,912 | % | |||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | $ Change | % Change | ||||||||||||||||||||
|
Net cash used in:
|
|||||||||||||||||||||||
|
Operating activities
|
$ | (23,431) | $ | (2,631) | $ | (20,800) | 791 | % | |||||||||||||||
|
Investing activities
|
(8,528) | (53) | (8,475) | 15,991 | % | ||||||||||||||||||
|
Financing activities
|
145,317 | 2,844 | 142,473 | 5,010 | % | ||||||||||||||||||
| Net change in cash and cash equivalents | $ | 113,358 | $ | 160 | $ | 113,198 | 70,749 | % | |||||||||||||||
On June 24, 2026, we entered into a securities purchase agreement with certain accredited investors providing for the issuance and sale of 7,017,540 shares of common stock at a purchase price of $14.25 per share, for aggregate gross proceeds of approximately $100.0 million. On June 26, 2026 we closed on net proceeds of approximately $95.4 million after placement agent fees and offering expenses. We agreed to a 45-day lock-up on additional equity issuances, which expired on August 10, 2026.
The shares were issued in reliance on the exemptions from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D thereunder, and are restricted securities. We agreed to register the shares for resale, and on June 29, 2026 we filed an automatic shelf registration statement on Form S-3, which became effective upon filing. The registration statement includes a resale prospectus covering the resale of all 7,017,540 shares by the selling stockholders, and we will not receive any proceeds from those resales. It also includes a base prospectus under which we may offer and sell, from time to time, an indeterminate amount of common stock, preferred stock, debt securities, warrants, subscription rights and units.
On March 9, 2026, we completed an underwritten public offering of 2,702,702 shares of our common stock at a public offering price of $18.50 per share and the Underwriters purchased shares pursuant to the underwriting agreement at a price per Share of (i) $17.39 in connection with 2,349,037 Shares sold to investors sourced by the Underwriters and (ii) $18.22 for 353,665 Shares sold to investors sourced by the Company. We received gross proceeds of $50.0 million and net proceeds of approximately $46.8 million, after underwriting discounts and commissions of approximately $2.7 million and offering expenses. We granted the underwriters a 30-day option to purchase up to 396,963 additional shares on the same
terms to cover over-allotments; the option expired unexercised on April 8, 2026. We agreed to a 60-day lock-up on additional equity issuances, which expired on May 8, 2026.
Effective March 5, 2026, and in connection with the offering, we terminated the at-the-market equity program inherited from Blackbox, under which we sold 260,000 shares for gross proceeds of approximately $2.2 million from inception through February 19, 2026. We do not intend to resume sales under the program.
We continue to pursue and evaluate financing with the Export-Import Bank of the United States ("EXIM") under the October 2025 non-binding Letter of Interest (the "LOI") for up to $200.0 million. In accordance with EXIM's regular procedures, we requested an extension of the LOI in advance of its expiry on October 14, 2026, which is under review by EXIM staff. The LOI would support our planned North American integrated rare earth processing supply chain and contemplates a provisional 15-year repayment term if definitive financing is executed. There is no assurance we will enter into definitive financing on these or any terms.
Material cash requirements include remaining commitments under the SRC development agreements of approximately $56.0 million as of September 30, 2026, which are expected to be incurred through 2028 to bring the Company's strategic processing and metallization projects to commissioning. This amount is based on SRC's time-and-materials estimates and includes the $7.2 million third milestone paid in October 2026. Material cash requirements also include the working-capital prepayment under the SRC supply arrangement, currently estimated at $8.1 million, which is expected before operations begin and depends on the timing of commissioning. See Note 11 - Commitments and Contingencies. In addition to the estimated SRC capital project costs, the Company anticipates the existing liquidity and capital resources are sufficient to fund general corporate costs through the same period. The ability to fund these requirements is not expected to depend on the completion of any specific future financing transaction.
We plan to spend approximately $10 million on our Phase 2 pre-feasibility program through 2027. We also expect to spend approximately $0.8 million in 2027 on activities required before a potential EUL at Tooele Army Depot can be executed, including surveying, permitting and project management. These amounts are estimates, and actual costs could differ materially, including if site surveys identify conditions that require mitigation. We expect to fund these costs from existing cash. The Tooele estimate excludes rent, decommissioning security and facility construction, which depend on reaching a definitive EUL.
Outside of the Company's strategic development and other costs described above, additional capital may be required for longer-term development initiatives, including those related to:
•Phase 1 - Rare Earth Processing Expansion and Metallization Facility working capital needs: These include, among others, feedstock of recycled and other rare earth inputs beyond the estimated working-capital prepayment described above, prior to the commercial operations of the expanded REPF and the Company's planned commercial-scale metallization facility.
•Phase 2 - Integrated U.S. Rare Earth Separation, Metallization and Magnet Platform: We are advancing pre-feasibility work for the stage-gated platform described under "Phase 2" above. The location, timing and capital requirements of the Phase 2 facilities have not yet been determined. Any future development is expected to require significant capital, and the Company's ability to advance the project will depend on access to additional financing.
•Hoidas Lake: Beyond maintaining the claims in good standing, development of a producing mine would require substantial additional capital expenditures that are not included in the Company's currently committed capital and development program. The scope and timing of such expenditures have not yet been determined and will depend on the results of ongoing technical and feasibility studies and future development decisions.
•Other non-committed long-term development and growth opportunities, including capital required to develop facilities under a potential EUL with the U.S. Army at Tooele Army Depot, and potential strategic magnet production and expansion.
Cash is expected to continue being used in our consolidated operating activities for the foreseeable future as we invest in commercializing our integrated processing platform.
The Company is actively evaluating a range of potential financing alternatives, including equity, equity-linked and debt instruments, as well as strategic and government-linked funding arrangements, to support and enhance its development pipeline and capital projects. As part of its broader capital strategy, the Company may adjust the timing,
scope or sequencing of certain discretionary or project-related expenditures, including deferring or phasing elements of its development program. Accordingly, the Company may pursue additional funding transactions, the timing, structure and amount of which will depend on market conditions, project prioritization and other factors, and there can be no assurance that such financing will be available on acceptable terms, or at all.
Operating Activities
For the three months ended September 30, 2026 and 2025, cash used in operating activities was $5.7 million and $1.9 million. The increase of $3.8 million in cash used in operating activities over the comparative period primarily reflects $0.8 million of cash deposits and expenses related to the Company's funding of the SRC REPF upgrade, the Company's Pilot Metallization and prepaid amounts under the SRC supply arrangement, and approximately $5.1 million of cash operating, and general and administrative expenses related to the increase in activity following the Company's public listing in the first quarter of 2026.
For the nine months ended September 30, 2026 and 2025, cash used in operating activities was $23.4 million and $2.6 million. The increase of, $20.8 million in cash used in operating activities over the comparative period primarily reflects approximately $1.1 million of cash deposits and expenses related to the Company's funding of the SRC REPF upgrade, the Company's Pilot Metallization and prepaid amounts under the SRC supply arrangement, and $12.5 million of cash operating, and general and administrative expenses related to the increase in activity following the Company's public listing in the first quarter of 2026.
The ($30.5 million) net loss for the three months ended September 30, 2026, is reconciled to operating cash use principally by $25.3 million of non-cash stock-based compensation expense related to equity awards made to Directors, Officers, Company management, and non-employee service contracts.
The ($174.1 million) net loss for the nine months ended September 30, 2026, is reconciled to operating cash use principally by non-cash items recognized in connection with the Merger and ongoing operations: $139.2 million of stock-based compensation related to awards made to Directors, Officers, Company Management and non-employee consultants, $6.4 million EVTEC impairment, $9.2 million of accretion expense on the Series C Convertible Preferred Stock recognized on conversion, and $3.4 million of change in fair value of contingent consideration prior to their conversion to common stock.
Investing Activities
For the three months ended September 30, 2026 and 2025 cash used in investing activities was $0.5 million and $- million. For the nine months ended September 30, 2026 and 2025 cash used in investing activities was $8.5 million and $0.1 million. The increase in cash used in investing activities for the nine months ended September 30, 2026 of $8.4 million is primarily driven by funding of the Company's Commercial REE Metallization project, including construction deposits, construction in progress equipment, and other project costs.
Financing Activities
For the three months ended September 30, 2026 and 2025 cash used in financing activities was $- million compared with cash provided by financing activities of $1.8 million for the three months ended September 30, 2025. For the nine months ended September 30, 2026 and 2025 cash provided by financing activities was $145.3 million and $2.8 million. The increase in cash provided by financing activities for the nine months ended September 30, 2026 of $142.5 million, is primarily driven by net proceeds from sale of common equity of $142.5 million and $2.6 million from the issuance of Series C Preferred Stock.
Known Trends and Uncertainties
The Company's future operating results are subject to a number of known trends and uncertainties. These include, the timing and cost of development activities relating to mineral properties and operational infrastructure, dependence on successful execution of supply chain and expansion initiatives, and the increased costs and administrative burden associated with operating as a newly public company.
In addition, the Company's future performance may be affected by the volatility of rare earth materials markets, the timing of customer demand in protected U.S. markets, regulatory and permitting developments, and the Company's ability to attract and retain qualified personnel and advisors necessary to support its operations and reporting functions.
•Effective January 1, 2027, the U.S. Department of Defense will prohibit procurement of covered permanent magnets containing rare earths from adversarial nations (NDAA FY2023 §857). This regulatory development is expected to create demand for the Company's North American supply chain; however, qualifying as a compliant supplier and executing defense contracts ahead of the effective date is subject to uncertainty.
•Rare earth processing and metallization depend on scarce, highly specialized metallurgical and engineering talent; failure to attract and retain qualified technical personnel amid intense competition for this limited pool could disrupt operations, delay scale-up, and materially adversely affect our results and ability to meet production and offtake commitments.
•Heavy rare earth prices (dysprosium, terbium) increased materially in early 2026. The Company does not currently hedge commodity price exposure. Pricing has also bifurcated between Chinese domestic and ex-China markets following China's April 2025 export controls: ex-China prices for dysprosium and terbium oxide have traded at multiples of Chinese domestic benchmarks.
•The Company's PMTCM revenue depends on contracts with U.S. government agencies; the DLA contract was awarded March 2, 2026. Any disruption to or failure to renew these contracts could adversely affect revenue.
•As a public company, the Company is incurring significant additional costs for SEC compliance, investor relations, and internal controls development.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the ordinary course of business. In the Company's previously issued interim financial statements for the period ended September 30, 2025, management concluded that substantial doubt existed about the Company's ability to continue as a going concern due to limited liquidity, negative operating cash flows and the early stage of the Company's operations.
In connection with the preparation of these condensed consolidated financial statements, management reevaluated the Company's ability to continue as a going concern in accordance with ASC 205-40.
In performing this assessment, management considered obligations probable of becoming due within the applicable assessment period and distinguished those obligations from larger strategic and development expenditures that are discretionary, non-binding, capable of being sequenced or expected to be financed separately. Management's improved liquidity position reflects the successful execution of financing plans contemplated in prior periods, including the closing of the Company's March 9, 2026, and June 26, 2026, equity offerings. Based on the Company's improved liquidity, management concluded that the conditions and events that raised substantial doubt in certain prior periods do not raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the consolidated financial statements are issued.
The Company expects that additional capital may be required in the future to support longer-term strategic growth initiatives and major development projects. However, management's going concern conclusion does not depend on the completion of any specific future financing transaction during the applicable one-year assessment period.
Critical Accounting Estimates
A complete discussion of our critical accounting estimates is included in the Company's Current Report on Form 8-K/A filed on May 12, 2026, and in Blackbox's Annual Report on Form 10-K for the year ended December 31, 2025. Other than those listed below, there have been no significant changes in our critical accounting estimates during the three months ended September 30, 2026.
Reverse Recapitalization
The accounting for the February 24, 2026 reverse recapitalization required significant management judgment and estimation as it pertains to the fair value of certain assets acquired. The EVTEC Holdings Group Limited investment acquired in the recapitalization was written down to an estimated fair value of approximately $2.0 million at the merger date, from a carrying value of $8.4 million, using unobservable inputs including assessments of EVTEC's operational disruption, customer concentration, and failed public-market transaction pathways. This Level 3 fair value measurement is inherently uncertain and actual results may differ materially.
Off-Balance Sheet Arrangements
As of September 30, 2026, the Company did not have any off-balance sheet arrangements.
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