REalloys Inc.
08/13/2026 | Press release | Distributed by Public on 08/13/2026 15:06
Quarterly Report for Quarter Ending June 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."
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 for U.S. Protected Markets, including defense, aerospace, energy, electronics and advanced industrial applications. Our strategy pairs upstream rare earth resources with midstream separation and purification, and downstream metallization and magnet manufacturing, all located in North America.
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 and medical imaging equipment. 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. ("PMTCM"), 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
Executive and Board Leadership Changes
On June 24, 2026, Robert Winspear resigned as the Company's Chief Financial Officer, effective as of that date. In connection with his departure, the Company and Mr. Winspear entered into a General Release and Severance Agreement, pursuant to which the Company agreed to provide customary separation benefits in exchange for a general release of claims and his continued cooperation with the Company during a transition period.
On the same date, the Board of Directors (the "Board") appointed Craig Cunningham, to serve as the Company's Chief Financial Officer and principal financial officer, effective June 24, 2026. Mr. Cunningham has served as an Executive Director of Provenance Advisors, a Toronto, Ontario-based financial advisory firm, since August 2023, and previously provided management advisory services to the Company through Provenance Advisors from July 2025 until his appointment as Chief Financial Officer. Mr. Cunningham is a Chartered Professional Accountant (CPA, CA) and holds an Executive Master of Business Administration from the Ivey Business School at Western University, bringing more than two decades of public-company experience and leadership across the critical minerals and mining sectors. Within the critical minerals and metals industry he most recently served as Chief Financial Officer of Li-Cycle Holdings Corp., a cross-border lithium-ion battery resource recovery company, and as Chief Financial Officer of Electra Battery Materials Corporation, a North American battery metals and materials processor., from June 2022 to July 2023, roles in which he was responsible for financial reporting, capital markets execution and strategic planning for critical minerals businesses closely aligned with the Company's own mine-to-magnet strategy. Over a span of 12 years, Mr. Cunningham held a series of increasingly senior finance and leadership roles with Kinross Gold Corporation, a global gold mining company, culminating in his service as Vice President, Regional Financial Officer, Russia, where he oversaw financial operations, procurement, logistics, and information technology for a multi-billion-dollar international mining portfolio. Mr. Cunningham provides his services to the Company on an independent contractor basis pursuant to a Chief Financial Officer Consulting Agreement, dated June 24, 2026 (the "CFO Consulting Agreement"), which is filed as Exhibit 10.2 to this Form 10-Q.
On June 26, 2026, Joseph Sawyer notified the Company of his resignation from the Board, effective as of June 29, 2026. The Company does not currently intend to appoint a replacement director to fill the resulting vacancy. In connection with his departure from the Board, Mr. Sawyer joined the Company in a management capacity as Director, Projects and Delivery, effective July 1, 2026, where he will provide project management and drive delivery of the Company's various strategic development projects.
Completed Significant Capital Raise
During the three months ended June 30, 2026, we closed on approximately $100.0 million in gross proceeds through a private placement of common stock. Clear Street LLC acted as placement agent in the offering and was granted a 180-day right to participate in certain future financings, which remains in effect through September 5, 2026. We intend to use the net proceeds for the advancement of our processing and metallization projects, working capital and general corporate purposes.
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 targeted annual processing capacity of approximately 50 tonnes of combined Dy and Tb oxide feedstock.
With our planned Rare Earth Processing Facility upgrade funding, the SRC is expected to commence upgrade activity in Q3 2026, while staged commissioning of the plant is already underway. The upgrades are intended to increase annual production capacity 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. Jointly, the Company and SRC plan to advance processing and separation trials using recycled mixed rare earth oxide feedstock during H2 2026, with the objective of producing separated material for potential customer qualification as early as Q4 2026.
We expect to advance technical studies for our Phase 2 strategic initiatives, wholly owned, increased scale Integrated Rare Earth Separation and Metallization Facility.
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.
Feedstock Sourcing and Development
We continued to evaluate prospective primary feedstock sources under our existing MOUs and other arrangements, with a focus on advancing selected opportunities toward definitive feedstock supply agreements.
Rare Earth Offtake Agreement with Critical Metals Corp.
On May 20, 2026, we executed a definitive long-term Rare Earth Product Offtake Agreement with Critical Metals Corp. ("CRML") covering 15% of monthly Phase 1 production from CRML's Tanbreez rare earth project in southern Greenland. The agreement replaces and supersedes the previously announced non-binding letter of intent between the parties.
Deliveries begin only once the parties agree on detailed product specifications and qualification requirements. Tanbreez is not in production, and the timing of first deliveries depends on the development of the project by Critical Metals, which is outside our control. We have not purchased or received any material under this agreement, and it had no effect on our results of operations, financial position or cash flows for the three and six months ended June 30, 2026.
Feedstock Development Agreements
During the quarter we entered into several non-binding arrangements intended to develop a diversified North American feedstock network:
•U.S. Critical Materials Corp., contemplating offtake of up to 10% of production from the Sheep Creek project in Ravalli County, Montana
•Ramaco Resources, Inc., contemplating mixed rare earth carbonate feedstock from the Brook Mine in Wyoming
•Patriot Exploration & Mining, contemplating priority access to up to approximately 30% of its rare earth production
None obligates either party to enter into a definitive agreement, none provides for the purchase or sale of any material, and no consideration has been paid or received. There can be no assurance that any definitive agreement will result, or that any of the volumes described will be available to us. These arrangements had no effect on our results of operations, financial position or cash flows for the three and six months ended June 30, 2026.
Agreement and Plan of Merger
On March 10, 2025, REalloys Inc. (formerly known as Blackbox; "REalloys" or the "Company") and its wholly owned subsidiary, RABLBX Merger Sub, Inc., ("RABLBX"), entered into an Agreement and Plan of Merger dated as of December 10, 2025 (as amended, the "Merger Agreement"), with REalloys Solutions Inc. (formerly known as REalloys Inc.; "Private REalloys"). In accordance with the Merger Agreement, on February 24, 2026: (i) RABLBX merged with and into Private REalloys, with Private REalloys surviving as a wholly owned subsidiary of the Company, (ii) pursuant to an amendment to its Articles of Incorporation, the Company changed its name from "Blackbox" to "REalloys Inc.", (iii) pursuant to an amendment to its Articles of Incorporation, Private REalloys changed its name to "REalloys Solutions Inc. (collectively, the "Merger"). In connection with the closing of the Merger, our common stock began trading on the Nasdaq Capital Market under the symbol "ALOY" on February 25, 2026. The Merger was accounted for as a reverse recapitalization. Private REalloys is the accounting acquirer, and the historical financial statements presented in this Form 10-Q are those of Private REalloys. Blackbox's operations are included in our consolidated results from February 25, 2026, and Blackbox.io, Inc. was deconsolidated on May 5, 2026, following the Option Exercise.
Option Exercise
On May 5, 2026, we entered into an option exercise agreement with Gust Kepler (the "Option Exercise Agreement" and such exercise, the "Option Exercise"). Previously, on February 24, 2026, pursuant to that certain Option Agreement, dated as of February 24, 2026 (the "Option Agreement"), upon exercise of the Put Right (as defined therein), Mr. Kepler was required to transfer an aggregate of 1,084,999 shares of Company's Series A Preferred Stock, par value $0.001 (the "Series A Preferred Stock") held by Mr. Kepler in exchange for the Company transferring an aggregate of 3,269,998 shares of Series A Preferred Stock of Blackbox.io, Inc., which represents all of the Series A Preferred Stock of Blackbox.io, Inc. owned by us. Following the Option Exercise, Blackbox.io ceased to be a subsidiary of the Company.
Preferred Share Conversion and Deconsolidation of Blackbox.io, Inc.
On April 14, 2026, Gust Kepler, the former CEO of Blackbox converted 550,000 shares of Series A Convertible Preferred Stock into 550,000 shares of common stock in accordance with the related Certificate of Designations.
On May 5, 2026, pursuant to the 2025 Option Exercise Agreement with Gust Kepler, the sole director and President of Blackbox.io, Inc. ("Blackbox.io"), the Nevada corporation that operates the historic Blackbox fintech business. Pursuant to that agreement, Mr. Kepler transferred to us 1,084,999 shares of our Series A Convertible Preferred Stock and we transferred to Mr. Kepler 3,269,998 shares of Series A Preferred Stock of Blackbox.io, representing all such shares we held.
Each share of Blackbox.io Series A Preferred Stock carries 100 votes per share and votes with the common stock as a single class. Following the transfer, Mr. Kepler holds a majority of Blackbox.io's voting power, and we no longer have the ability to elect or remove directors or otherwise direct the activities most significant to Blackbox.io's economic performance. We retain our common stock equity interest in Blackbox.io, which represents a non-controlling minority voting interest.
As of May 2026, following the Option Exercise, Blackbox.io ceased to be a subsidiary. Blackbox.io is not material to our consolidated results, financial position or cash flows; the financial effect of the deconsolidation is reflected in our financial statements for the three and six months ended June 30, 2026.
Separately, on the same day Mr. Kepler sold 1,634,999 shares of our Series A Convertible Preferred Stock to Leonard Sternheim for aggregate consideration of $1.00, pursuant to a previously disclosed February 24, 2026, stock purchase agreement contingent on closing of the Merger. We were not a party to, and received no proceeds from that transaction. As a result of these transactions, voting control of the Company is now substantially concentrated in our Chief Executive Officer and director, Leonard Sternheim. Following the Company's reacquisition and cancellation of 1,084,999 shares of our Series A Convertible Preferred Stock from Mr. Kepler. Mr. Sternheim beneficially owns all of the shares of our Series A Convertible Preferred Stock that remain outstanding. Each share of our Series A Convertible Preferred Stock carries 100 votes per share and votes together with our Common Stock as a single class on all matters submitted to a vote of stockholders. Without considering the shares of our Common Stock that Mr. Sternheim directly or indirectly holds, Mr. Sternheim now controls a substantial majority of the aggregate voting power of our outstanding capital stock. As a
consequence, the Company now meets the definition of a "controlled company" within the meaning of Nasdaq Listing Rule 5615(c). The Company does not currently intend to rely on the corporate governance exemptions available to controlled companies under Nasdaq Listing Rule 5615(c)(2), and will continue to maintain a majority-independent Board of Directors and fully independent Audit, Compensation, and Nominating and Corporate Governance Committees. The concentration of voting power described above, the potential for transactions in which Mr. Sternheim has an interest that differs from that of our other stockholders, and the limited ability of our public stockholders to influence matters submitted to a vote could materially and adversely affect the trading price of our Common Stock and are described in greater detail in Part II, Item 1A of this Quarterly Report on Form 10-Q.
U.S. Army Enhanced Use Lease Opportunity, Tooele Army Depot
On June 25, 2026, we announced that we had been selected by the U.S. Army for exclusive negotiations toward a long-term Enhanced Use Lease at Tooele Army Depot in Utah. If a lease is executed, we would design, finance, build and operate heavy rare earth processing facilities at the site. The arrangement is non-binding and does not obligate either party to enter into a definitive agreement. There can be no assurance that negotiations will result in a lease, or that any lease would be on the terms we currently contemplate. As of June 30, 2026, we had not committed capital to the site, had incurred no material costs in connection with the opportunity, and had recognized no revenue or assets related to it.
Any development of the site would be subject to the execution of a definitive lease, environmental review and permitting, the availability of financing, and the completion of engineering and procurement. We continue to advance our negotiations and planning with the U.S. Army ahead of the September 8, 2026, scheduled completion of the negotiation phase of the selection process.
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 "Cautionary Note Regarding 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.
During 2025 and into 2026, 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. That suspension is for a term of one year and is currently expected to lapse in the fourth quarter of 2026.
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 has emerged 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 June 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, Section 857 of the FY2023 National Defense Authorization Act prohibits the U.S. Department of Defense from procuring covered permanent magnets containing rare earths sourced from adversarial nations. We expect this to create increased demand for the North American rare earth materials and metals we plan to refine and produced. However, winning defense and related contracts and obtaining the necessary supplier qualification ahead of the effective date remains 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: The North American Gap
China currently accounts for more than 90% of global magnet rare earth separation and refining capacity, a concentration that has remained around this level for 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, on its own, 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.
Our principal midstream vehicle is our relationship with the Saskatchewan Research Council ("SRC"), a Canadian provincial research and technology organization that operates one of the few heavy rare earth separation facilities outside China.
Phase 1: Expansion of the SRC Processing and REalloys Metallization
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 is our relationship with SRC, under which we entered into arrangements in November 2025 to support the upgrade of SRC's existing Rare Earth Processing Facility (the "REPF"),
pilot-scale heavy rare earth process development, the build out of a commercial-scale heavy rare earth metallization facility, and the acquisition, on a cost-plus basis, of 80% of the NdPr metal and Dy and Tb oxides produced at the existing REPF.
The Pilot project is intended to support process development and validation activities. The anticipated pilot process and related pilot equipment are expected to provide technical information necessary to determine processing specifications, equipment configuration, operating parameters, and other requirements for the planned commercial-scale metallization facility. The results, timing, and cost of the pilot program may affect the scope, timing, and cost of the commercial-scale facility and our related capital requirements.
Under the REPF upgrade arrangement, we are funding an expansion of SRC's separation capacity for NdPr metal and dysprosium and terbium oxides. In exchange, we secured rights to a substantial share of that output on a cost-plus basis, giving us a contracted North American source of separated heavy rare earth material. The dysprosium and terbium oxides are intended to feed the commercial-scale metallization facility we are developing with SRC, which would convert them into metal for alloy and magnet materials production at our Euclid facility. We currently expect initial separated oxide production from SRC in the second half of 2027, and dysprosium and terbium metal output from the metallization facility we are funding 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 three months ended June 30, 2026, we paid aggregate deposits of $11.1 million to SRC, consisting of $3.7 million for our REPF Upgrade Project and $7.4 million towards our commercial Heavy RE Metallization Facility. In the three months ending June 30, 2026, we began receiving equipment and other related project services as we continued to advance our work in Saskatchewan.
Future expenditures related to the planned commercial-scale metallization facility may be significant and may vary based on the pilot results, 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
We are developing a North American rare earth processing facility intended to produce separated rare earth metals for defense and industrial customers. At full design capacity, we are targeting annual production of approximately 3,000 metric tons of neodymium-praseodymium metal, 200 metric tons of dysprosium metal and 45 metric tons of terbium metal. We intend to source feedstock for the facility from rare earth concentrate produced in the United States and allied jurisdictions, including under the offtake agreement and development arrangements described under "Recent Developments." We have not secured feedstock sufficient to supply the facility at design capacity.
We are undertaking feasibility work to assess both technical viability, including process flowsheet design and equipment configuration, and economic viability, including total capital and operating costs. The capital required is expected to be substantial and materially in excess of our current cash resources. We expect to fund the project through a combination of equity, project-level financing and government-linked programs. We currently target initial operating capability no later than 2030.
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 (including under our SRC arrangement), workforce and continued compliance with the requirements applicable to U.S. government and defense customers. We have paused efforts toward increasing the facilities NdFeB magnet materials production capacity, which had been estimated to reach 1,000 mtpa by the second quarter of 2027, while we evaluate other
opportunities. The timing and outcome of the strategic magnet evaluation are uncertain and will impact any resumption and may impact the scope and timing of the previously planned expansion. 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 expansion pause.
Advancement of the Hoidas Lake Project
The Hoidas Lake Project remains an exploration-stage property. As of June 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.
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.
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 June 30, 2025, reflect the operations of pre-merger Private REalloys Inc. (the accounting acquirer) together with a full quarter of PMT Critical Metals Inc. ("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 June 30, 2026, reflects (i) 56 days of consolidated Blackbox operations (April 1 through May 5, 2026) prior to the deconsolidation of Blackbox.io which contained most of Blackbox's activity, and (ii) significant public company and other SG&A costs associated with the Company's on-going expansion of activity not present in the comparative period.
Accordingly, the period-over-period percentage changes shown in the table below - including the 3,312% increase in general and administrative expense and the 2,702% 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 June 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 June 30, 2026, Compared to Three Months Ended June 30, 2025
| Three Months Ended | |||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
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Net Revenues
|
$ | 804 | $ | 440 | $ | 364 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Cost of sales | 329 | 219 | 110 | ||||||||||||||||||||
| Software and development costs | 34 | - | 34 | ||||||||||||||||||||
| General and administrative | 36,031 | 1,056 | 34,975 | 3,312 | % | ||||||||||||||||||
| Advertising and marketing | 1,310 | - | 1,310 | ||||||||||||||||||||
| Depreciation and amortization | (96) | 67 | (163) | ||||||||||||||||||||
| Total operating expenses | 37,608 | 1,342 | 36,266 | 2,702 | % | ||||||||||||||||||
| Loss from operations | (36,804) | (902) | (35,902) | 3,980 | % | ||||||||||||||||||
|
Other expense
|
14 | 1,298 | (1,284) | (99) | % | ||||||||||||||||||
| Net loss | (36,818) | (2,200) | (34,618) | 1,574 | % | ||||||||||||||||||
Six months ended June 30, 2026, Compared to Six Months Ended June 30, 2025
| Six Months Ended | |||||||||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||
| Net Revenues | $ | 1,510 | $ | 440 | $ | 1,070 | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||
| Cost of sales | 628 | 219 | 409 | ||||||||||||||||||||||||||
| Software and development costs | 68 | - | 68 | ||||||||||||||||||||||||||
| General and administrative | 121,432 | 1,924 | 119,508 | 6,211 | % | ||||||||||||||||||||||||
| Advertising and marketing | 3,851 | - | 3,851 | ||||||||||||||||||||||||||
| Depreciation and amortization | (8) | 67 | (75) | ||||||||||||||||||||||||||
| Total operating expenses | 125,971 | 2,210 | 123,761 | 5,600 | % | ||||||||||||||||||||||||
| 0 | |||||||||||||||||||||||||||||
| Loss from operations | (124,461) | (1,770) | (122,691) | 6,932 | % | ||||||||||||||||||||||||
| Other expense | 19,075 | 2,173 | 16,902 | 778 | % | ||||||||||||||||||||||||
| Net loss | (143,536) | (3,943) | (139,593) | 3,540 | % | ||||||||||||||||||||||||
Revenue
Revenue for the three months ended June 30, 2026 was $0.8 million, compared to $0.4 million for the three months June 30, 2025. The increase of $0.4 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, together with subscription revenue from the Blackbox trading analytics platform for the 56 days Blackbox.io was included in the three months ending June 30, 2026.
Revenue for the six months ended June 30, 2026 was $1.5 million, compared to $0.4 million for the six months June 30, 2025. In addition to the factors noted above,the increase of, $1.1 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 June 30, 2026 was $0.3 million, compared to $0.2 million for the three months ended June 30, 2025. Cost of revenues for the six months ended June 30, 2026 was $0.63 million, compared to $0.22 million for the six months ended June 30, 2025. Cost of revenues consists 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, together with Blackbox cost of revenues (merchant fees, data feeds, and technology costs) for the partially consolidated period.
Gross margin for the three months ended June 30, 2026 was $0.5 million, representing a gross margin of 59.1%. Gross margin for the three months ended June 30, 2025 was $0.2 million, representing a gross margin of 50.2%. Gross margin for the six months ended June 30, 2026 was $0.9 million, representing a gross margin of 58.4%. Gross margin for the three months ended June 30, 2025 was $0.2 million, representing a gross margin of 50.2%.
General and Administrative
General and Administrative expenses for three months ended June 30, 2026 and 2025 was $36.0 million, and $1.1 million respectively. The increase was driven primarily by $32.1 million of stock-based compensation. Stock based compensation expense included $19.5 million related to RSU and RPSU awarded to members of the Board of Directors of the Company and executives and $12.6 million related to shares-for-services consulting awards granted in 2025 and 2026. Excluding non-cash items, SG&A was approximately $3.9 million, of professional fees, legal, audit, and other general and administrative expenses.
General and Administrative expenses for six months ended June 30, 2026 and 2025 was $121.4 million, and $1.9 million respectively. The increase was driven primarily by $113.9 million of stock-based compensation. Stock based compensation expense included $84.3 million related to RSU and RPSU awarded to members of the Board of Directors of the Company and executives and $29.5 million related to shares-for-services consulting awards granted in 2025 and 2026. Excluding non-cash items, SG&A was approximately $7.6 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 June 30, 2026 were $1.3 million, compared to $- million for the three months ended June 30, 2025. Advertising and marketing expenses for the six months ended June 30, 2026 were $3.9 million, compared to $- million for the six months ended June 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 June 30, 2026 was $(0.1) million, compared to $0.1 million for the three months ended June 30, 2025. Depreciation and amortization for the six months ended June 30, 2026 was $(0.01) million, compared to $0.1 million for the six months ended June 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 June 30, 2026 was net expense of $0.01 million, compared with net expense of $(1.3) million for the three months ended June 30, 2025. The components of the period-over-period change are summarized below (in thousands):
| Three Months Ended | |||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||
| Impairment of EVTEC investment | $ | - | $ | - | $ | - | |||||||||||||||||
| Change in fair value of contingent consideration | - | 2,096 | (2,096) | (100)% | |||||||||||||||||||
| Deferred cash consideration late payment penalties | - | (3,300) | 3,300 | (100)% | |||||||||||||||||||
| Accretion expense - Series C Convertible Preferred Stock | - | - | - | ||||||||||||||||||||
| Interest income, interest expense and other, net | (14) | (94) | 80 | (85)% | |||||||||||||||||||
| Other income (expense), net | $ | (14) | $ | (1,298) | $ | 1,284 | (99)% | ||||||||||||||||
Other income (expense), net for the six months ended June 30, 2026 was net expense of ($19.1 million), compared with net expense of ($2.2 million) for the three months ended June 30, 2025. The components of the period-over-period change are summarized below (in thousands):
| Six Months Ended | |||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||
| Impairment of EVTEC investment | $ | (6,394) | $ | - | $ | - | $ | (6,394) | |||||||||||||||
| Change in fair value of contingent consideration | (3,439) | - | 1,312 | (4,751) | (362)% | ||||||||||||||||||
| Deferred cash consideration late payment penalties | - | (3,300) | 3,300 | (100)% | |||||||||||||||||||
| Accretion expense - Series C Convertible Preferred Stock | (9,228) | - | - | (9,228) | 100% | ||||||||||||||||||
| Interest income, interest expense and other, net | (14) | - | (184) | 170 | (92)% | ||||||||||||||||||
| Other income (expense), net | $ | (19,075) | $ | (2,172) | $ | (16,903) | 778% | ||||||||||||||||
Net Loss
Net loss for the three months ended June 30, 2026 was ($36.8 million), compared to ($2.2 million) for the three months ended June 30, 2025. The significant increase in net loss was driven primarily by $32.1 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 six months ended June 30, 2026 was ($143.5 million), compared to ($3.9 million) for the six months ended June 30, 2025. The significant increase in net loss was driven primarily by $113.9 million in stock-based compensation recognized in the quarter, and other expense of $19.1 million primarily resulting from to 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 June 30, 2026, the Company had cash of $122.4 million, and as of the financial statement issuance date of August 13, 2026, the Company had approximately $119.6 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 June 30, 2026 | As of December 31, 2025 | |||||||||
| Cash and cash equivalents | $ | 122,357 | $ | 2,824 | |||||||
| Working capital (current assets minus current liabilities) | 149,072 | 31,387 | |||||||||
| Accumulated deficit | (224,661) | (81,125) | |||||||||
| Total stockholders' equity | $ | 190,604 | $ | 35,834 | |||||||
The following table summarizes our cash flows (in thousands):
| Three Months Ended | |||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||
| Net cash used in: | |||||||||||||||||||||||
| Operating activities | $ | (8,170) | $ | (351) | $ | (7,819) | 2,228 | % | |||||||||||||||
| Investing activities | (7,460) | (10) | (7,450) | 74,504 | % | ||||||||||||||||||
| Financing activities | 87,939 | 236 | 87,703 | 37,162 | % | ||||||||||||||||||
| Net change in cash and cash equivalents | $ | 72,309 | $ | (125) | $ | 72,434 | (57,947) | % | |||||||||||||||
| Six Months Ended | |||||||||||||||||||||||
| June 30, 2026 | June 30, 2025 | $ Change | % Change | ||||||||||||||||||||
|
Net cash used in:
|
|||||||||||||||||||||||
|
Operating activities
|
$ | (17,720) | $ | (702) | $ | (17,018) | 2,424 | % | |||||||||||||||
|
Investing activities
|
(8,064) | (10) | (8,054) | 80,544 | % | ||||||||||||||||||
|
Financing activities
|
145,317 | 1,077 | 144,240 | 13,393 | % | ||||||||||||||||||
| Net change in cash and cash equivalents | $ | 119,533 | $ | 365 | $ | 119,168 | 32,649 | % | |||||||||||||||
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 260,000 shares had been sold 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 a the October 2025 non-binding Letter of Interest (the "LOI") for up to $200.0 million, which remains open through October 14, 2026. 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 commitments include the fully funded SRC capital commitments of approximately $58.3 million through 2028, to bring the Company's strategic processing and metallization projects to commissioning. 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.
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 earths inputs prior to the commercial operations of the expanded SRC REEE facility and the Company's planned commercial scale metallization facility.
•Phase 2 - Future Integrated Rare Earth Separation and Metallization Facility: The Company continues to advance technical studies for a future commercial-scale rare earth separation and metallization facility, separate from the existing SRC Rare Earth Processing Facility, Pilot and Commercial Metallization Plan. The scope, location, timing and capital requirements of the potential Phase 2 facility 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: Advancement beyond the currently funded study program, 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 and among others, capital and funding required to develop and build facilities related to the conditionally awarded Enhanced Use Lease with the U.S. Army, and potential strategic magnet related 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 ending June 30, 2026 and 2025, cash used in operating activities was $8.2 million and $0.4 million. The increase of, $7.7 million in cash used in operating activities over the comparative period primarily reflects, $3.0 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 $4.8 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 six months ending June 30, 2026 and 2025, cash used in operating activities was $17.7 million and $0.7 million. The increase of, $17.0 million in cash used in operating activities over the comparative period primarily reflects approximately $6.1 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 $9.7 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 ($36.8 million) net loss for the three months ending June 30, 2026, is reconciled to operating cash use principally by $32.1 million of non-cash stock-based compensation expense related to equity awards made to to Directors, Officers and non-employee consultants.
The ($143.5 million) net loss for the six months ending June 30, 2026, is reconciled to operating cash use principally by non-cash items recognized in connection with the Merger and on-going operations: $113.9 million of stock-based compensation related to awards made to Directors, Officers, 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 ending June 30, 2026 and 2025 cash used in investing activities was $7.5 million and $- million. For the six month ending June 30, 2026 and 2025 cash used in investing activities was $8.1 million and $- million. The increase in cash used in investing for the three and six months ending June 30, 2026 and 2025 of, $7.5 million and $8.1 million, is primarily driven by deposits made to the SRC, construction in progress equipment and other project costs related to the Company's Commercial REE Metallization facility. Part of the Company's Phase 1 strategic projects, these deposits made to the SRC will fund future equipment, facility lease and project related costs for the development and construction of the Company's metallization facility.
Financing Activities
For the three months ending June 30, 2026 and 2025 cash provided by financing activities was $87.9 million and $0.2 million. For the six month ending June 30, 2026 and 2025 cash used in investing activities was $145.3 million and $1.1 million. The increase in cash provided by financing for the three and six months ending June 30, 2026 and 2025 of, $87.7 million and $144.2 million, is primarily driven by net proceeds from sale of common equity of $95.5 million and $142.5 million respectively and, $2.6 million from the issuance of Series X Preferred stock in Q1 2026.
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 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 our 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 June 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. Second, 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 June 30, 2026, the Company did not have any off-balance sheet arrangements.
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