REALLOYS INC. 10-Q

Item 1. Financial Statements REalloys, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except share and per share data) As of June 30, 2026 December 31, 2025 (unaudited) (audited) ASSETS Current assets: Cash $ 122,357 $ 2,824 Accounts receivable, net of allowance for credit losses of $ 0 1,894 730 Prepaid expenses 17,230 34,987 Project deposits 12,614 - Total current assets 154,095 38,541 Non-current assets: Goodwill 1,923 2,077 Intangible assets, net 1,370 1,316 Mineral Properties 50,532 50,532 Machinery and equipment, net 310 321 Construction in Progress 973 - Operating lease right-of-use asset, net 569 602 Total non-current assets 55,677 54,848 Total assets 209,772 93,389 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses 4,121 3,433 Accrued expenses, related party 790 610 Current portion of operating lease liabilities 68 2 Note payable, related party 44 94 SAFE liability, related party - 1,320 SAFE liability - 1,695 Total current liabilities 5,023 7,154 Non-current liabilities: Contingent consideration - 34,561 Deferred tax liability 13,644 13,644 Long-term debt - 154 Long-term operating lease liabilities 501 536 Total non-current liabilities 14,145 48,895 Total liabilities 19,168 56,049 Mezzanine equity Series C redeemable preferred stock, $ 0.001 par value; 15,000 shares authorized, 0 and 684 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively - 1,506 Stockholders’ equity Series A preferred stock, $ 0.001 par value; 1,634,999 shares authorized, 1,634,999 and 0 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 1 - Common stock, $ 0.001 par value, 350,000,000 shares authorized, 68,782,077 and 49,293,557 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 68 12 Additional paid in capital 415,196 116,946 Accumulated deficit ( 224,661 ) ( 81,125 ) Total Stockholders’ equity 190,604 35,834 Total liabilities and Stockholders’ equity $ 209,772 $ 93,389 See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Share and per share amounts have been retroactively restated to reflect the 0.4129 exchange ratio applied in the February 24, 2026 reverse recapitalization. Series X Preferred Stock is no longer presented as a separate class of equity in these unaudited condensed consolidated statements of mezzanine equity and stockholders' equity, as all such amounts have been reflected on a retrospective basis consistent with the recapitalization presentation. See Note 4. 4 REalloys, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (unaudited) (unaudited) (unaudited) (unaudited) Net Revenues $ 804 $ 440 $ 1,510 $ 440 Operating expenses: Cost of sales 329 219 628 219 Software development costs 34 - 68 - General and administrative 36,031 1,056 121,432 1,924 Advertising and marketing 1,310 - 3,851 - Depreciation and amortization ( 96 ) 67 ( 8 ) 67 Total operating expenses 37,608 1,342 125,971 2,210 Loss from operations ( 36,804 ) ( 902 ) ( 124,461 ) ( 1,770 ) - - Interest expense 14 94 22 185 Change in fair value of contingent consideration - ( 2,096 ) 3,439 ( 1,312 ) Deferred cash consideration late payment penalties - 3,300 - 3,300 Impairment expense - - 6,394 - Accretion of discount on issuance of Series C Preferred Stock - - 9,220 - Total other expense 14 1,298 19,075 2,173 Net loss ( 36,818 ) ( 2,200 ) ( 143,536 ) ( 3,943 ) Basic and diluted net loss per share ( 0.59 ) ( 0.05 ) ( 2.49 ) ( 0.11 ) Weighted-average shares used in computation of net loss per share: Basic and diluted 62,142,617 41,290,000 57,704,321 36,965,956 See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Share and per share amounts have been retroactively restated to reflect the 0.4129 exchange ratio applied in the February 24, 2026 reverse recapitalization. Series X Preferred Stock is no longer presented as a separate class of equity in these unaudited condensed consolidated statements of mezzanine equity and stockholders' equity, as all such amounts have been reflected on a retrospective basis consistent with the recapitalization presentation. See Note 4. 5 REalloys, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity (Deficit) (Unaudited) (In thousands, except share data) Six Months Ended June 30, 2026 Series C Preferred Shares Series A Preferred Shares Common Shares Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity (Deficit) Balances as of December 31, 2025 2,000 $ 1,506 - - 119,383,766 $ 12 $ 116,976 $ ( 81,125 ) $ 35,863 Retroactive application of recapitalization ( 1,316 ) - - - ( 70,090,209 ) 37 ( 37 ) - - Adjusted balances, as of December 31, 2025 684 1,506 - - 49,293,557 49 116,939 ( 81,125 ) 35,863 Issuance of Preferred Stock for cash 4,442 2,600 3,269,998 3 - - - - 3 Commitment shares issued for cash - - - - 1,077,353 1 - - 1 Issuance of Common Stock under SAFE - - - - 160,606 - 3,015 - 3,015 Common stock issued at Blackboxstocks Inc. merger - - - - 4,480,437 4 6,230 - 6,234 Conversion of Special Warrants - - - - 2,093,664 2 37,998 - 38,000 Issuance of Common Stock, net of offering costs - - - - 2,702,702 3 47,008 - 47,011 Accretion of discount on issuance of Series C preferred stock - 9,220 - - - - - - - Conversion of Series C preferred stock ( 5,126 ) ( 13,326 ) - - 1,374,018 1 13,325 - 13,326 Exercise of stock options - - - - 32,200 - - - - Stock-based compensation expense - - - - - - 64,830 - 64,830 Imputed interest treated as a capital contribution - - - - - - 3 - 3 Net loss — Q1 2026 - - - - - - - ( 106,718 ) ( 106,718 ) Balances as of March 31, 2026 - - 3,269,998 3 61,214,537 $ 60 $ 289,348 $ ( 187,843 ) $ 101,568 Issuance of common stock, net of offering costs - - - - 7,017,540 7 95,393 - 95,400 Conversion of Series A preferred stock - - ( 550,000 ) ( 1 ) 550,000 1 - - - See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Share and per share amounts have been retroactively restated to reflect the 0.4129 exchange ratio applied in the February 24, 2026 reverse recapitalization. Series X Preferred Stock is no longer presented as a separate class of equity in these unaudited condensed consolidated statements of mezzanine equity and stockholders' equity, as all such amounts have been reflected on a retrospective basis consistent with the recapitalization presentation. See Note 4. 6 Six Months Ended June 30, 2026 Series C Preferred Shares Series A Preferred Shares Common Shares Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity (Deficit) Reacquisition and cancellation of Series A preferred stock - - ( 1,084,999 ) ( 1 ) - - 55 - 54 Stock-based compensation expense - - - - - - 30,398 - 30,398 Exercise of stock options - - - - - - - - - Capital contribution for imputed interest - - - - - - 2 - 2 Net loss — Q2 2026 - - - - - - - ( 36,818 ) ( 36,818 ) Balances, June 30, 2026 - $ - 1,634,999 1 68,782,077 $ 68 $ 415,196 $ ( 224,661 ) $ 190,604 Six Months Ended June 30, 2025 Series C Preferred Shares Series A Preferred Shares Common Shares Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity (Deficit) Balances as of December 31, 2024 - - - - 76,500,000 8 213 ( 5,449 ) ( 5,228 ) Retroactive application of recapitalization - - - - ( 44,913,150 ) 24 ( 24 ) - - Adjusted balances, as of December 31, 2024 - - - - 31,586,850 32 189 ( 5,449 ) ( 5,228 ) Issuance of common stock for acquisition of business - - - - 5,780,600 6 4,833 - 6 Issuance of preferred stock and common stock for cash 413 - - - 2,064,500 2 769 - 771 See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Share and per share amounts have been retroactively restated to reflect the 0.4129 exchange ratio applied in the February 24, 2026 reverse recapitalization. Series X Preferred Stock is no longer presented as a separate class of equity in these unaudited condensed consolidated statements of mezzanine equity and stockholders' equity, as all such amounts have been reflected on a retrospective basis consistent with the recapitalization presentation. See Note 4. 7 Issuance of common shares for services - - - - 1,858,050 - - - - Imputed interest treated as a capital contribution - - - - - - 91 - 91 Net loss - - - - - - - ( 1,742 ) ( 1,742 ) Balances as of March 31, 2025 413 $ - - - 41,290,000 $ 40 $ 5,882 $ ( 7,191 ) $ ( 1,269 ) Imputed interest treated as a capital contribution - - - - - - 91 - 91 Net loss - - - - - - - ( 2,200 ) ( 2,200 ) Balances, June 30, 2025 413 $ - - - 41,290,000 $ 40 $ 5,973 $ ( 9,391 ) $ ( 3,378 ) See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Share and per share amounts have been retroactively restated to reflect the 0.4129 exchange ratio applied in the February 24, 2026 reverse recapitalization. Series X Preferred Stock is no longer presented as a separate class of equity in these unaudited condensed consolidated statements of mezzanine equity and stockholders' equity, as all such amounts have been reflected on a retrospective basis consistent with the recapitalization presentation. See Note 4. 8 REalloys Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six Months Ended June 30, 2026 2025 (unaudited) (unaudited) Net loss $ ( 143,536 ) $ ( 3,943 ) Adjustments to reconcile net loss to net cash used in operating activities: Imputed interest expense 5 181 Change in operating lease ROU assets 99 16 Depreciation and amortization expense ( 8 ) 67 Accretion of discount on preferred stock 9,220 - Stock-based compensation expense 113,860 - Deferred cash consideration penalty - 3,300 Change in fair value of contingent consideration 3,439 ( 1,312 ) Impairment of investment 6,394 817 Change in operating assets and liabilities: Prepaid expenses ( 6,091 ) - Accounts payable and accrued expenses 206 532 Unearned subscriptions ( 108 ) - Accounts receivable ( 1,165 ) ( 344 ) Operating lease liability & Other ( 35 ) ( 16 ) Net cash used in operating activities ( 17,720 ) ( 702 ) Cash flows from investing activities Cash acquired in reverse recapitalization, net of deconsolidation 330 - Capital deposits and construction in progress ( 8,370 ) Purchase of machinery and equipment ( 24 ) ( 10 ) Net cash provided by investing activities ( 8,064 ) ( 10 ) Cash flows from financing activities Proceeds from notes payable - 140 Proceeds from notes payable, related party 195 - Proceeds from SAFE Liability - 195 Payment of deferred cash consideration - ( 139 ) Proceeds from issuance of Series C Preferred Stock 2,600 - Proceeds from issuance of common stock 142,522 881 Net cash provided by financing activities 145,317 1,077 Net increase in cash and restricted cash 119,533 365 Cash and restricted cash, beginning of period 2,824 113 Cash and restricted cash, end of period 122,357 478 Supplemental cash flow information: Cash paid for interest - - Cash paid for income tax - - Supplemental disclosures of non-cash investing and financing activities: Acquisition of a business - $ 3,545 SAFE liabilities converted to equity 3,015 $ - Special Warrants converted to equity 38,000 $ - Net assets acquired in recapitalization, net of deconsolidation 6,228 $ - Conversion of Series C Preferred Stock 13,326 $ - Issuance of common shares for services $ 10,880 $ - See Accompanying Notes to the Unaudited Condensed Consolidated Financial Statements. Share and per share amounts have been retroactively restated to reflect the 0.4129 exchange ratio applied in the February 24, 2026 reverse recapitalization. Series X Preferred Stock is no longer presented as a separate class of equity in these unaudited condensed consolidated statements of mezzanine equity and stockholders' equity, as all such amounts have been reflected on a retrospective basis consistent with the recapitalization presentation. See Note 4. 9 REalloys, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Amounts in thousands, except as noted and share and per share amounts) Note 1 – Description of Business and Basis of Presentation Description of Business REalloys, Inc. (the “Company” or “REalloys”) is a development-stage company building a North American integrated rare earth to high-performance neodymium iron boron (“NdFeB”) magnet materials and magnet supply chain focused on meeting the demands of the protected markets of the United States, which includes the U.S. National Defense Stockpiles (“NDS”), Defense Industrial Base (“DIB”), Nuclear Industrial Base (“NIB”), robotics, electric aviation, and critical infrastructure industries. The Company trades on The Nasdaq Capital Market under the ticker symbol “ALOY.” The Company has adopted a structured approach to building its North American rare earth to high-performance NdFeB magnet materials and magnet supply chain through producing magnet materials and magnets that meet the performance requirements of US Protected Markets clients and building capacity to meet the demand of US Protected Market clients on a timetable to meet such demand In line with this strategy, the Company initially acquired 100 % of Strategic Metals Development Inc., on May 29, 2024, which owns 100 % of the Hoidas Lake Rare Earth Element Project in Saskatchewan, Canada, which comprises 14 contiguous mineral claims totaling 12,522 hectares. The Company believes that the Hoidas Lake project has the potential to be a long-term North American source of rare earth materials as a primary feedstock for its magnet materials and integrated supply chain. The Company also acquired PMT Critical Metals Inc. (“PMTCM”), on March 31, 2025, which became a wholly owned subsidiary, and which operates the Euclid facility in Euclid, Ohio. The Euclid facility produces rare earth metals, alloys and magnet materials for the Defense Logistics Agency, the U.S. Department of Energy’s AMES National Laboratory and industry clients, and the Company is evaluating opportunities to scale production to meet a portion of U.S. protected market demand. The Company is continuing to evaluate additional opportunities to strengthen its integrated North American magnet and magnet materials supply chain and improve resiliency, capabilities and capacity. Reverse Recapitalization On February 24, 2026, the Company completed a reverse recapitalization transaction with Blackboxstocks Inc. (“Blackbox”) in which REalloys was determined to be the accounting acquirer. See Note 4 – Blackbox Reverse Recapitalization and Deconsolidation of Blackbox.io, Inc. . The Company’s common stock commenced trading on The Nasdaq Capital Market under the symbol "ALOY" on February 25, 2026. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC applicable to interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation have been included. The unaudited Condensed Consolidated Financial Statements include the accounts of REalloys, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Blackbox.io, Inc. ("Blackbox.io") was a consolidated subsidiary from February 25, 2026, through May 5, 2026, and was deconsolidated effective May 5, 2026. The results of operations are included in the Company’s consolidated results for that period only. See Note 4 – Blackbox Reverse Recapitalization and Deconsolidation of Blackbox.io, Inc. 10 Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited financial statements and related notes 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. Note 2 – Summary of Significant Accounting Policies The Company’s significant accounting policies are described in the notes to the audited financial statements included in the Company’s Current Report on Form 8-K/A filed on May 12, 2026 (amending the Current Report on Form 8-K filed on February 25, 2026), and in Blackbox’s Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated by reference into such Current Reports. There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2026, except as described below. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to, accounting for the reverse recapitalization transaction, the valuation of equity instruments and stock-based compensation, the fair value of the retained interest in Blackbox.io on deconsolidation, the assessment of the recoverability of long-lived assets, including mineral properties, and the evaluation of the Company’s ability to continue as a going concern. The accounting for payments under the Saskatchewan Research Council (SRC) arrangements requires judgment in determining the nature of the underlying goods or services procured and received. Areas of judgment include the useful life of equipment, including equipment associated with our pilot project, whether such equipment or materials have alternative future use, and whether costs are directly attributable to preparing any long-lived asset for its intended use. See Note 5 – Prepaid Expenses and Project Deposits . Restricted Cash Restricted cash consists of cash deposits that are not available for general corporate purposes due to contractual or other restrictions. The Company presents restricted cash together with cash and cash equivalents in the statement of cash flows and includes such amounts within current or non‑current assets on the consolidated balance sheets based on the expected timing of release of the restrictions. As of March 31, 2026, restricted cash was $ 7.5 million and consisted of deposits received from prospective investors in connection with potential investment transactions. These deposits were subject to contractual conditions and were therefore not available for use in the Company’s operations. In April 2026, following a joint decision by the Company and the prospective investors not to proceed with the potential investments, the Company returned the full $ 7.5 million of restricted cash to the investors. There was no restricted cash balance as of June 30, 2026, or December 31, 2025. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, when control of goods or services is transferred to customers. PMTCM recognizes revenue from the sale of rare earth metals and magnet materials primarily under the output method or right-to-invoice practical expedient as production is completed and delivered to customers. Subscription revenue from the Blackbox trading analytics platform was recognized ratably over the subscription period on a straight-line basis through May 5, 2026, the date Blackbox.io was deconsolidated. See Note 4 - Blackbox Reverse Recapitalization and Deconsolidation of Blackbox.io, Inc. 11 Note 3 – Going Concern 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. In connection with the preparation of the Company’s issued Audited Consolidated Financial Statements for the year ending December 31, 2025, management reevaluated the Company’s liquidity position in accordance with ASC 205-40. The Company completed a public offering on March 9, 2026, generating net proceeds of approximately $ 46.8 million. Management performed the ASC 205-40 assessment by comparing projected baseline cash requirements for the twelve months following the issuance date against available liquidity. Baseline obligations (operating costs, lease payments, and contractual commitments that cannot be deferred or eliminated) were estimated to be substantially below the available liquidity. Expenditures under the SRC agreements represent discretionary project spend capable of being sequenced or financed separately and were excluded from the baseline analysis. Based on this assessment, management concluded that substantial doubt about the Company’s ability to continue as a going concern did not exist. On June 24, 2026, the Company completed a private placement of common shares generating net proceeds of approximately $ 95.4 million. There has been no deterioration in the circumstances or the assessment of the Company’s ability to continue as a going concern in the preparation of these interim condensed consolidated financial statements. The Company expects that additional capital will be required for longer-term strategic growth; however, this conclusion does not depend on any specific future financing transaction. Note 4 – Blackbox Reverse Recapitalization and Deconsolidation of Blackbox.io, Inc. On February 24, 2026, the Company completed a reverse recapitalization with Blackboxstocks Inc. (“Blackbox”) pursuant to the Agreement and Plan of Merger, as amended. REalloys was the accounting acquirer, and the transaction was not treated as a business combination under ASC 805. Accordingly, Blackbox’s assets and liabilities were recorded at historical carrying values, no goodwill or intangible assets were recognized in connection with the transaction, and all share and per-share amounts have been retroactively adjusted to reflect the exchange ratio of 0.4129 .The Company’s historical financial statements are a continuation of those of REalloys. The transaction is described in full in the Company’s Current Report on Form 8-K/A filed May 12, 2026, and in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, which includes the screen test analysis, the concentration of value assessment, the resulting ownership percentages and the retroactive restatement mechanics. Net assets acquired were $ 6.2 million, including $ 0.4 million of cash. See Note 8 - Stockholders’ Equity for the impact on equity, Note 9 - Stock-Based Compensation for stock-based compensation and Note 10 - Fair Value Measurements for the Special Warrant liability. Investment in EVTEC Holdings Group Limited The Company held an investment in EVTEC Holdings Group Limited investment ("EVTEC"), a private UK-based automotive components manufacturer, acquired through the February 24, 2026, reverse recapitalization with Blackbox. The investment was recorded at its historical carrying value of $ 8.4 million on the closing date. On February 24, 2026, in accordance with ASC 820 and ASC 321, the fair value of the investment was determined to be approximately $ 2.0 million. An impairment of approximately $ 6.4 million was recognized at the merger date reflecting the failure of two contemplated public-market transaction pathways, persistent operational disruption resulting from a cyber-attack on EVTEC’s primary customer, reduced FY2026 revenue guidance, and concentrated customer exposure. The investment was held by Blackbox.io, Inc. and was derecognized on May 5, 2026, as part of the assets removed from the consolidated balance sheet following the loss-of-control over a subsidiary event described below. The carrying value on the date of derecognition was $ 2.0 million. No additional impairment was recognized in the three months ended June 30, 2026 , and the Company held no investment in EVTEC as of June 30, 2026. Investments were $ 0 on the condensed consolidated balance sheets at both June 30, 2026 , and December 31, 2025. 12 Deconsolidation of Blackbox.io, Inc. On May 5, 2026, Gust Kepler exercised his put right under the Option Agreement dated February 24, 2026. Pursuant to the Option Exercise Agreement, Mr. Kepler transferred 1,084,999 shares of the Company’s Series A Convertible Preferred Stock to the Company, and the Company transferred to Mr. Kepler 3,269,998 shares of Series A Preferred Stock of Blackbox.io, Inc. (“Blackbox.io”), representing all such shares held by the Company. 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 the voting power of Blackbox.io. The Company concluded that it no longer has the ability to elect or remove directors or otherwise direct the activities that most significantly affect Blackbox.io's economic performance and, accordingly, deconsolidated Blackbox.io effective May 5, 2026, in accordance with ASC 810-10-40. The Company retains a common stock interest in Blackbox.io representing a non-controlling minority voting interest. Upon deconsolidation the Company derecognized the assets and liabilities of Blackbox.io, including cash of $ 0.07 million and the $ 2 million carrying value of the investment in EVTEC described above. Blackbox.io was in a net liability position and the aggregate carrying amount of the net liabilities derecognized was $ 0.05 million. The consideration received consisted of 1,084,999 shares of the Company’s own Series A Convertible Preferred Stock, which were reacquired and cancelled. The fair value of those shares on May 5, 2026, to be nominal, reflecting the conversion cap and leak-out provisions in Section 4 of the Option Agreement and the $ 1.00 aggregate consideration at which 1,634,999 shares of the same class changed hands between unrelated third parties on the same date. The Company retained 3,226,145 shares of Blackbox.io common stock representing a non-controlling minority voting interest. No value was ascribed to the retained interest, reflecting Blackbox.io’s net liability position. The counterparty to the Option Exercise, now former, was an officer and director of Blackbox when the Option Agreement was entered, and an officer and director of Blackbox.io while it was under the Company's control, through the Option Exercise date. The exchange was accounted for as a related party transaction and therefore, no gain or loss was recognized in the condensed consolidated statements of operations, and the $ 0.05 million net effect was recorded as an increase to additional paid-in capital. See Note 8 - Stockholders’ Equity . The retained common stock interest in Blackbox.io is accounted for under the measurement alternative of ASC 321 for equity securities without a readily determinable fair value, at cost less impairment, adjusted for observable price changes. Its carrying value was nil at June 30, 2026 , and it is not separately presented on the condensed consolidated balance sheet. The results of operations of Blackbox.io are included in the Company’s condensed consolidated statements of operations from February 25, 2026, through to the point of deconsolidation, May 5, 2026. Blackbox.io was not material to the Company’s consolidated results of operations, financial position or cash flows for any period presented. The Company’s continuing involvement with Blackbox.io following deconsolidation consists of the retained common stock interest described above and the Contingent Value Rights Agreement entered into at the closing of the Merger, which is described in Note 11 – Commitments and Contingencies . Note 5 – Prepaid Expenses and Project Deposits Prepaid expenses and project deposits consist primarily of the unamortized value of consulting service agreements settled through issuance of common stock and advance payments to the Saskatchewan Research Council pursuant to the Company’s pilot metallization project. Under stock-based consulting arrangements, the grant-date fair value of common shares issued for future services is recorded as a prepaid asset and amortized over the applicable service period in accordance with ASC 718. On November 20, 2025, the Company entered into a series of strategic arrangements with SRC to develop capabilities in rare-earth processing and metallization. The arrangements include, among other matters, a pilot-scale processing arrangement designed to evaluate and define processing parameters for dysprosium and terbium metallization, a 13 commercial-scale engineering and processing facility arrangement intended to support development of a commercial-scale metallization facility, and an upgrade of SRC’s existing Rare Earth Processing Facility. See Note 11 – Commitments and Contingencies . During the six months ended June 30, 2026, the Company paid aggregate advances to SRC of $ 14.4 million, of which $ 12.6 million remained recorded as project deposits at June 30, 2026, and $ 1.0 million was reclassified to construction in progress during the three months ended June 30, 2026 upon the Company obtaining control of identifiable equipment and directly attributable costs qualifying for capitalization. See Note 11 – Commitments and Contingencies . The Pilot project is intended to support pilot-scale process development and validation activities. The pilot process and related pilot equipment are expected to provide the technical information necessary to determine processing specifications, equipment configuration, operating parameters, and other requirements for the Company’s planned commercial-scale metallization facility. Amounts paid relating to the Pilot are expected to be recognized as research and project development expenses as the related services are performed, unless specific equipment, materials, or other assets are acquired that have an alternative future use and otherwise qualify for capitalization. Amounts paid relating to the commercial-scale metallization facility are capitalized as construction in progress or machinery and equipment when the Company receives or obtains control of identifiable equipment, materials, construction activity, or other directly attributable costs that qualify for capitalization. Advance payments for which the Company has not received or otherwise obtained control of equipment or services remain recorded as project deposits and are assessed for recoverability each reporting period. The agreements are time-and-materials arrangements, and total costs, timing, and scope remain subject to SRC work programs, procurement, technical results, and the Company’s approval of future expenditures. The Company has not recognized a liability for future amounts that may become payable under the arrangements because such amounts relate to future goods, services, or construction activities that had not been received or incurred as of June 30, 2026. The following table presents prepaid expenses and project deposits as of June 30, 2026, and December 31, 2025 (in thousands). June 30, 2026 ($) December 31, 2025 ($) Equity-based consulting prepaid (shares-for-services) $ 16,129 $ 34,987 Saskatchewan Research Council advance payments 12,614 - Advertising and marketing prepaid 121 - Professional fees and other prepaid 980 - Total prepaid expenses and project deposits $ 29,844 $ 34,987 The following table summarizes the activity of project deposits as of the six months ending June 30, 2026. Project Deposits — Activity for the Six Months Ended June 30, 2026 (amounts in thousands) : Balance at December 31, 2025 Advances paid Transferred to construction in progress Recognized in expense Balance at June 30, 2026 Pilot HREE Metallization $ - $ 1,315 $ - $ ( 315 ) $ 1,000 Commercial HREE Metallization 0 8,370 ( 973 ) ( 281 ) 7,116 SRC REPF Upgrade - 3,898 - ( 200 ) 3,698 Supply agreement - 800 - - 800 Total project deposits $ - $ 14,383 $ ( 973 ) $ ( 796 ) $ 12,614 14 Note 6 – Mineral Properties and Machinery and Equipment , and Construction in Progress The Hoidas Lake Rare Earth Element Project comprises 14 contiguous mineral claims totaling 12,522 hectares in Saskatchewan, Canada. The property is in the exploration and evaluation stage. Costs associated with acquisition of mineral properties are capitalized; exploration costs are expensed as incurred. No depletion has been recognized as the property has not been placed into production. Mineral claims remain in good standing through assessment credits with minimum required expenditures deferred through dates ranging from October 2027 to June 2029. During the three months ended June 30, 2026, $ 1.0 million was reclassified from project deposits to construction in progress as the Company has received or otherwise obtained control of identifiable equipment related to its SRC commercial-scale metallization facility. Construction in progress is not depreciated until the related assets are placed in service. See Note 5 – Prepaid Expenses and Project Deposits . As of June 30, 2026, no impairment indicators were identified with respect to the Hoidas Lake mineral property or the Euclid facility fixed assets. Depreciation expense for the three months ended June 30, 2026, was included in depreciation and amortization expense in the condensed consolidated statements of operations. Machinery and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Construction in progress represents costs incurred on assets not yet placed in service and is not depreciated. The Company evaluates mineral properties and machinery and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Mineral properties and machinery and equipment were $ 51.8 million and $ 50.9 million as of June 30, 2026, and December 31, 2025, respectively. The following table presents mineral properties, machinery and equipment, and construction in progress as of June 30, 2026, and December 31, 2025 (in thousands) June 30, 2026 ($) December 31, 2025 ($) Mineral properties $ 50,532 $ 50,532 Machinery and equipment 679 655 Construction in Progress 973 - Less: Accumulated depreciation ( 369 ) ( 334 ) Total mineral properties, machinery and equipment, and construction in progress $ 51,815 $ 50,853 Note 7 – Accounts payable and accrued expenses Accounts payable and accrued expenses consist primarily of accrued professional fees, including legal, accounting, and consulting services, as well as other general and administrative liabilities incurred in the normal course of business. Accrued liabilities were $ 4.1 million and $ 3.4 million as of June 30, 2026, and December 31, 2025, respectively. Note 8 – Stockholders' Equity (Deficit) Common Stock The Company i s authorized to issue 350,000,000 shares of common stock, par value $ 0.001 per share. As of June 30, 2026, and December 31, 2025, there were approximately 68,782,077 and 49,293,557 shar es of common stock issued and outstanding, respectively. Reverse Recapitalization In connection with the February 24, 2026, reverse recapitalization, the Company issued 4,480,437 shares to former Blackbox stockholders, 2,093,664 shares on the automatic conversion of the Special Warrants (see Note 10 – Fair Value Measurements ), 160,606 shares on the conversion of all outstanding SAFEs, and 1,077,353 commitment shares. All 15 outstanding Series C Convertible Preferred Stock converted into 1,374,018 shares of common stock during the three months ended March 31, 2026. Public and Private Offerings On March 9, 2026, the Company completed an underwritten public offering of 2,702,702 shares at $ 18.50 per share for gross proceeds of $ 50.0 million and net proceeds of approximately $ 46.8 million. In connection with the offering the Company terminated the at-the-market equity program inherited from Blackbox, effective March 5, 2026. On June 24, 2026, the Company 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 $ 14.25 per share for aggregate gross proceeds of approximately $ 100.0 million. Net proceeds were approximately $ 95.4 million after placement agent fees and offering expenses. The offering closed June 26, 2026. The shares were issued in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D and are restricted securities. On June 29, 2026, the Company filed an automatic shelf registration statement on Form S-3 including a resale prospectus covering all 7,017,540 shares. Shares Committed and Not Yet Issued During the six months ended June 30, 2026, the Company entered into share-settled consulting arrangements covering 1,000,000 shares of common stock. The aggregate grant-date fair value of $ 10.7 million was recorded as a Shares for Services prepaid with a corresponding credit to additional paid-in capital at the grant date. The Company recognizes the related expense on a straight-line basis over each service period. Expense of $ - and $ 2.8 million was recognized for the three and six months ended June 30, 2026. The shares were not issued as of June 30, 2026, and are excluded from the 68,782,077 shares of common stock issued and outstanding at that date. Upon issuance, the Company will reclassify the par value of those shares from additional paid-in capital to common stock. The reclassification will have no effect on total stockholders' equity, and no additional cost will be recognized. The shares will enter the weighted-average common shares outstanding from the date of issuance. See Note 9 – Stock-Based Compensation . Series A Preferred Stock Shares of the Series A Convertible Preferred Stock (the “Series A Stock”) rank pari passu with the Company’s Common Stock with respect to dividend and liquidation rights. Additionally, each share entitles the holder to 100 votes on matters submitted to Company stockholders. As of June 30, 2026 there were 1,634,999 shares of Series A Stock outstanding all of which are held by Leonard Sternheim, the Company’s Chief Executive Officer and Executive Director. On April 14, 2026, Mr. Kepler converted 550,000 shares of Series A Convertible Preferred Stock into 550,000 shares of common stock on a one -for-one basis. On May 5, 2026, the Company reacquired and cancelled 1,084,999 shares of Series A Convertible Preferred Stock held by Mr. Kepler in connection with the Option Exercise described in Note 4 – Blackbox Reverse Recapitalization and Deconsolidation of Blackbox.io, Inc. Separately and on the same date, Mr. Kepler sold his remaining 1,634,999 shares of Series A Convertible Preferred Stock to Mr. Sternheim for aggregate consideration of $ 1.00 pursuant to a previously disclosed February 24, 2026 stock purchase agreement. The Company was not a party to, and received no proceeds from, that transaction. As a result of these transactions, Mr. Sternheim beneficially owns all outstanding shares of Series A Convertible Preferred Stock and controls a majority of the aggregate voting power of the Company’s outstanding capital stock. The Company therefore 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 controlled company exemptions and intends to continue to maintain a majority-independent Board of Directors and fully independent Audit, Compensation, and Nominating and Corporate Governance Committees. Additional Paid-In Capital Additional paid-in capital primarily consists of amounts received in excess of par value from the issuance of common stock, as well as the impact of the reverse recapitalization transaction. Transaction costs directly attributable to the reverse recapitalization were recorded as a reduction to additional paid-in capital. 16 Note 9 – Stock-Based Compensation In December 2025, the Company’s board of directors adopted the REalloys Inc. 2025 Long‑Term Incentive Plan (the “2025 Plan”), which provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), deferred share units (“DSUs”), performance awards and other share‑based awards to employees, directors and eligible service providers. The 2025 Plan became effective in connection with the Merger on February 25, 2026. The maximum number of shares of common stock that may be issued under the 2025 Plan is 8,500,000 , subject to adjustment in the event of stock splits, stock dividends, recapitalizations and other similar events as provided in the 2025 Plan. Pursuant to the Blackbox recapitalization, the 2021 Blackbox, Inc. Incentive Stock Plan (the “2021 Plan”), remains in effect, with 612,500 shares authorized to be issued under the plan. The 2021 Plan allows the Company, under the direction of the Board of Directors or a committee thereof, to make grants of stock options, restricted and unrestricted stock and other stock-based awards to employees, including our executive officers, consultants and directors. The executive and director stock, non-performance and non-market based RSU awards and unvested stock options granted under the 2025 Plan and the 2021 plan are accounted for as equity-classified share-based payment arrangements under ASC 718, with compensation cost recognized over the applicable requisite service periods and a corresponding increase to additional paid-in capital. Performance-based RSU awards are recognized only when achievement of the applicable performance condition is considered probable. Market-based awards are measured at grant-date fair value and recognized over the requisite service period regardless of whether the market condition is ultimately achieved, provided the requisite service is rendered. For service agreements in which common shares are issued in exchange for services with non-employees, other than Directors and Officers, the grant-date fair value is recorded as a prepaid asset and amortized on a straight-line basis over the service period. Awards modified in connection with the reverse recapitalization On February 24, 2026, we completed the merger contemplated by the Agreement and Plan of Merger, dated March 10, 2025, as amended, among Blackboxstocks Inc., its wholly owned subsidiary RABLBX Merger Sub, Inc., and REalloys Solutions Inc. (formerly known as REalloys Inc., “Private REalloys”). RABLBX Merger Sub, Inc. merged with and into Private REalloys, with Private REalloys surviving as our wholly owned subsidiary (the “Merger”). Prior to the Merger, Private REalloys Inc. granted restricted share units (“RSUs”) and restricted performance share units (“RPSUs”) under its equity incentive plan. In connection with the reverse recapitalization each outstanding RSU and RPSU was converted in accordance with the REalloys Inc. 2025 Long‑Term Incentive Plan, which provides that, in the event of a recapitalization, reorganization, merger, consolidation, share exchange or other similar corporate transaction affecting the fair value of an award, the Committee shall adjust the number and type of shares subject to outstanding awards and other applicable terms so that the fair value of the award immediately after the transaction equals the fair value of the award immediately prior to the transaction. Accordingly, the Company adjusted the number of shares subject to the outstanding RSUs and RPSUs so that the aggregate grant-date fair value of each award immediately after the reverse recapitalization equaled its aggregate grant-date fair value immediately before, preserving the underlying economic value of the awards. The service‑based and performance conditions, and vesting terms of the awards, remained unchanged as they were granted in contemplation of a public listing. The conversion was accounted for as a modification of equity‑classified awards and an equity restructuring under ASC 718, with no impact on the fair value of the converted awards. Immediately prior to the reverse recapitalization, there were 12,000,000 RSUs and 5,500,000 RPSUs ( 1,375,000 market-based RPSUs and 4,125,000 performance-based RPSUs) outstanding, all granted to the CEO of then Private REalloys Inc., now Public REalloys Inc. As a result of applying the 0.4129 exchange ratio, and the modification terms of these awards under the 2025 incentive plan, the awards converted into 3,407,718 RSUs and 1,135,919 RPSUs over Public REalloys Inc., common stock, which are included in the stock-based compensation tables presented below. The RPSUs include anti-dilution features that may increase the number of shares issued following a vesting event. On February 24, 2026, the Company granted 3,509,650 restricted stock units to its directors and officers under the 2025 Plan, with a grant-date fair value of $ 18.15 per unit and an aggregate grant-date fair value of $ 63.7 million. The awards vest 50 % on grant, 25 % on the first anniversary and 25 % on the second anniversary. Also, in connection with the reverse recapitalization, the Company assumed outstanding stock options of Blackboxstocks Inc. All such options were fully vested as of the closing date of the transaction and, accordingly, no future service was required from the holders after the closing date. As a result, the assumed options do not give rise to 17 post‑transaction stock‑based compensation expense and are not included in the Company’s share‑based compensation expense for the three and six months ended June 30, 2026. These assumed options are reflected within equity. See Note 8– Stockholders’ Equity (Deficit). The following table summarized the number of stock-based awards granted by the Company and the weighted-average grant date fair value per unit for the six-month periods ended June 30, 2026, and 2025, respectively: June 30, 2026 June 30, 2025 Weighted- Weighted- Stock-Based Average Stock-Based Average Awards Grant Awards Grant Granted Price Granted Price Restricted stock units 3,589,038 $ 18.12 - $ - 3,589,038 - The following tables show stock-based compensation expense by award type (in thousands): Three months Ended Six months Ended June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Stock awards - non Director, Officer, Employee 12,571 - 29,512 - Restricted stock units 15,266 - 80,096 - Restricted Performance share units 4,252 - 4,252 - Total stock-based compensation expense $ 32,089 $ - $ 113,860 $ - As of June 30, 2026, total unrecognized Director and Officer stock-based compensation expense, net of estimated forfeitures, related to non-vested equity awards was $ 55.0 million, which is expected to be recognized over a weighted-average period of 2.48 years. RSU, Market-based RPSU and Performance-based RPSU Awards The Company granted 3,589,038 and 0 restricted stock units to certain of its Directors and Officers for the six-month periods ended June 30, 2026, and 2025, respectively. The Company granted restricted performance stock units with a market-based performance metric (market-based restricted stock units) covering 1,375,000 equivalent shares of common stock to its Chief Executive Officer, Leonard Sternheim, with a grant date of December 15, 2025, and a market-based performance target of sustaining a $ 1.0 billion market capitalization for 30 consecutive trading days. The grant-date fair value of these awards was estimated using a Monte Carlo simulation model. The grant-date fair value was estimated at $ 11.5 million, based on an implied initial market capitalization of approximately $ 512.1 million, an expected volatility of 90.0 %, risk-free interest rates based on U.S. Treasury yields, an expected term consistent with the five-year performance period, and an assumption of no expected dividends. Compensation cost for this award is recognized over the requisite service period beginning on the grant date and is not reversed if the market condition is not ultimately achieved, provided that the requisite service has been rendered. In addition, Mr. Sternheim holds 568,182 ( 378,788 unvested) restricted performance stock units with non-market-based performance metrics (performance-based restricted stock units) that vest upon achievement of specified milestones, including: a qualifying strategic offtake or processing agreement, generating $ 50.0 million in revenue, or raising $ 100.0 million in capital. 18 The following table summarizes the activity related to the Company’s RSU awards during the period presented: Weighted- Average Number of Grant Date Shares Fair Value Nonvested as of January 1, 2026 12,000,000 $ 5.00 Converted in reverse recapitalization 3,305,785 18.15 Granted 3,589,038 18.12 Vested ( 3,457,412 ) Cancelled/Forfeited - - Nonvested as of June 30, 2026 3,437,411 $ 18.15 The following table summarizes the activity related to the Company’s market-based RSU awards: Weighted- Average Number of Grant Date Awards Fair Value Nonvested as of January 1, 2026 1,375,000 $ 8.35 Converted in reverse recapitalization 567,738 20.22 Granted - - Vested - - Cancelled/Forfeited - - Nonvested as of June 30, 2026 567,738 $ 20.22 The following table summarizes the activity related to the Company’s performance-based RSU awards: Weighted- Average Number of Grant Date Awards Fair Value Nonvested as of January 1, 2026 4,125,000 $ 5.00 Converted in reverse recapitalization 568,182 18.15 Granted - - Vested ( 189,394 ) - Cancelled/Forfeited - - Nonvested as of June 30, 2026 378,788 $ 18.15 Non-Director-Officer Stock-based Compensation The Company has entered into equity-based consulting agreements with various advisors and service providers under which shares of common stock were issued in exchange for future services. Where an agreement carries a substantive service period, the grant-date fair value is recorded as a prepaid asset and recognized as consulting expense over that period. Where the shares are fully vested and non-forfeitable at grant with no remaining service obligation, the full grant-date fair value is recognized on the grant date. 19 For the six months ended June 30, 2026, non-Director-Officer stock-based compensation expense was $ 29.5 million. Note 10 – Fair Value Measurements The Company measures certain financial liabilities at fair value on a recurring basis, including contingent consideration and certain warrant liabilities. These liabilities are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs. All such liabilities were settled or converted to equity prior to June 30, 2026. Accordingly, the Company had no assets or liabilities measured at fair value on a recurring basis as of June 30, 2026. Changes in the fair value of these liabilities are recognized in the condensed consolidated statements of operations.$ 3.4 million Derivative Instruments The Company’s derivative instruments pertained to the acquisition-related contingent consideration in the form of special warrants (the “Special Warrants”) issued by the Company on May 29, 2024 (the "Issuance Date"). The Special Warrants automatically converted into $ 38.0 million of the Company’s common shares upon completion of a liquidity event (as defined in the share purchase agreement). Prior to conversion, the liability was measured at fair value on a recurring basis using the probability-weighted expected return method (“PWERM”), a Level 3 measurement. Key assumptions at December 31, 2025, included liquidity event timing of February 2026 and March 2026, weighted at 80 % and 15 %, discount rates of 3.66 % and 3.60 %, and discounts for lack of marketability of 3.7 % and 5.7 %. The February 2026 merger with Blackbox constituted a liquidity event. Immediately prior to conversion, the carrying value of the Special Warrant liability was adjusted from $ 34.6 million to the contractual conversion amount of $ 38.0 million, resulting in a fair value loss of $ 3.4 million recorded in earnings. The Special Warrants converted into 2,093,664 common shares of the Company on February 24, 2026, and the $ 38.0 million liability was derecognized with an offsetting credit to additional paid-in capital. As of June 30, 2026. and December 31, 2025, the fair value of the Special Warrant liability was $ 0 and $ 34.6 million, respectively. The conversion occurred during the three months ended March 31, 2026, and there was no Level 3 activity during the three months ended June 30, 2026. During the three and six months ended June 30, 2026, the Company recorded a change in fair value of the contingent consideration of $ - million and $ 3.4 million (loss), respectively. During the three and six months ended June 30, 2025, the Company recorded a change in fair value of $ 2.1 million (gain) and $( 1.3 ) million (gain), respectively. The following table sets forth a summary of changes in fair value of the Company’s Level 3 liabilities for the three and six months ended June 30, 2026 (in thousands): Balance as of December 31, 2025 $ 34,561 Change in fair value 3,439 Conversion to equity upon liquidity event ( 38,000 ) Balance as of March 31, 2026 - Change in fair value - Balance as of June 30, 2026 $ - The following table sets forth a summary of changes in fair value of the Company’s Level 3 liabilities for the three and six months ended June 30, 2025 (in thousands): Balance as of December 31, 2024 $ 29,364 Change in fair value 784 Balance as of March 31, 2025 30,148 Change in fair value ( 2,096 ) Balance as of June 30, 2025 28,052 20 21 Note 11 – Commitments and Contingencies The Company may be subject to claims and contingencies in the normal course of business. As of June 30, 2026, the Company is not aware of, and has not recorded any expenses related to, any material legal proceedings requiring disclosure. Details of the Company’s other commitments are as follows: Operating Leases (In thousands) Right-of-Use Assets and Lease Liabilities June 30, 2026 ($) December 31, 2025 ($) ROU lease asset, net $ 569 $ 602 Lease liability, current 68 2 Lease liability, long-term 501 536 Total lease liability $ 569 $ 538 SRC Commitments On November 20, 2025, the Company executed three development agreements with SRC covering the pilot-scale metallization process, the commercial-scale metallization facility and the upgrade of SRC’s existing Rare Earth Processing Facility. See Note 5 – Prepaid Expenses and Project Deposits for additional details. The Company currently anticipates that, subject in all cases to progress, scope refinement, and the Company’s ongoing approval, it may advance the following in relation to the SRC arrangements: Total SRC Commitments as of June 30, 2026 (In thousands) Agreement Advances paid Total Commitments Remaining Commitments Pilot HREE Metallization $ 1,315 $ 10,492 $ 9,177 Commercial HREE Metallization 8,370 40,219 31,849 SRC REPF Upgrade 3,898 20,615 16,717 Total $ 13,583 $ 71,326 $ 57,743 SRC Commitments - before payments - by Year (In thousands) Agreement 2026 ($) 2027 ($) 2028 ($) Total Pilot HREE Metallization $ 4,973 $ 5,519 $ - $ 10,492 Commercial HREE Metallization 22,833 15,474 1,912 40,219 SRC REPF Upgrade 6,530 7,968 6,117 20,615 Total $ 34,336 $ 28,961 $ 8,029 $ 71,326 Of the $ 34.3 million anticipated for 2026, $ 13.6 million had been advanced as of June 30, 2026. The table above excludes the supply arrangement described below. 22 Concurrently, the Company entered into a long-term supply arrangement with SRC pursuant to which SRC will supply the Company with rare earth oxide and metal products produced using the expanded processing capabilities. In consideration of the prepaid advances, the Company is entitled to priority off-take rights, including an upfront allocation of 80 % of the NdPr metal and dysprosium and terbium oxides produced at the existing Rare Earth Processing Facility and a right of first refusal on uncommitted volumes. Products are purchased at SRC’s cost of production plus an agreed margin at reasonable commercial rates, subject to customary adjustments and applicable taxes. The supply arrangement includes standard delivery, take-or-pay, and force majeure provisions and is non-recourse to the Company beyond its obligation to pay for approved expenditures and delivered product. Acquisition Related Commitments & Contingencies The Hoidas Lake Property asset that was acquired on May 29, 2024, is subject to a 1.8 % Net Smelter Return (“NSR”) royalty. The NSR royalty has a maximum value of $ 1 million Canadian Dollars. Per the agreement, the royalty is paid quarterly from gross revenue after the project attains commercial production. These royalty payments represent a contingent consideration liability that the Company will recognize when it becomes probable and reasonably estimable or when the contingency is resolved. Contingent Value Rights Agreement Pursuant to the Merger with Blackbox, the Company entered into a Contingent Value Rights Agreement (the "CVR Agreement"). The CVR Agreement provides that each share of Blackbox Common Stock held by stockholders immediately prior to the Merger’s closing will receive a dividend of one contingent value right (“CVR”) entitling such holders to receive, in connection with certain transactions involving Blackbox.io, Inc. ("Blackbox Operating") (a “CVR Transaction”), an amount equal to the net proceeds received by the Company at the closing of such transaction. A CVR Transaction is generally a transaction pursuant to which (i) Blackbox Operating grants, sells, licenses or otherwise transfers some or all of the rights to the Blackbox Operating assets, or other monetizing event of all or any part of the Blackbox Operating assets and (ii) the Company receives or Blackbox Operating determines to distribute net proceeds from such transaction as a dividend to its stockholders. The CVR payment obligations will expire February 24, 2028. The CVRs are not transferable, except in certain limited circumstances, are not certificated or evidenced by any instrument, will not accrue interest and will not be registered with the SEC or listed for trading on any exchange. There is no guarantee that any CVR Transaction or payment pursuant thereto will be earned and no amounts were known to be or probable of being payable under the agreement at June 30, 2026. Blackbox Operating ceased to be a subsidiary of the Company on May 5, 2026, and the Company does not control whether a CVR Transaction occurs. See Note 4 – Blackbox Reverse Recapitalization and Deconsolidation of Blackbox.io, Inc. . 23 Note 12 – Related Party Transactions Note Payable - Isaac Sternheim On June 3, 2024, the Company entered into a promissory note agreement with a then 4.9 % stockholder of the Company, who is also related to the Co-founder, CEO & Director of the Company (the "Lender"), for the principal amount of $ 2.0 million, due upon the earlier of (i) January 31, 2026, and (ii) within two business days of the receipt by the Company of financing in excess of $ 10.0 million. The note bears no stated interest rate. The $ 10.0 million financing threshold was triggered upon closing of the March 9, 2026, public offering; accordingly, the outstanding balance is presented as current. The Company made a repayment of $ 50 on February 3, 2026, resulting in a balance of $ 44 at June 30, 2026. As a related party debt instrument with no stated interest charge, the Company records imputed interest at an estimated market rate of 18 % per annum. The Company recorded imputed interest of approximately $ 400 for the year ended December 31, 2025, and approximately $ 2 for the three months ended June 30, 2026, and $ 5 for the six months ended June 30, 2026. Imputed interest is recorded as interest expense with a corresponding increase to additional paid-in capital. Note Payable — Isaac Sternheim (in thousands) Amount ($) Balance, December 31, 2025 $ 94 Repayment — February 3, 2026 ( 50 ) Balance, June 30, 2026 $ 44 Employment Contract - PMTCM In connection with the acquisition of PMTCM, the Company assumed an employment contract with Andrew Sherman, the chief executive officer of PMTCM and a significant shareholder of the Company. Pursuant to the employment agreement, Mr. Sherman is entitled to a one-time acquisition bonus of $ 250 and a base salary of $ 30 per month. No amounts have been paid to date. As of June 30, 2026, and December 31, 2025, the accrued liability related to Mr. Sherman’s employment contract was $ 0.79 million and $ 0.61 million, respectively. Series A Preferred Stock On May 5, 2026, Mr. Kepler sold 1,634,999 shares of Series A Convertible Preferred Stock to Leonard Sternheim, the Company’s Chief Executive Officer and a director, for aggregate consideration of $ 1.00 . The Company was not a party to, and received no proceeds from that transaction. Following that transaction and the Company’s reacquisition and cancellation of 1,084,999 shares from Mr. Kepler, Mr. Sternheim beneficially owns all outstanding shares of Series A Convertible Preferred Stock and controls a substantial majority of the aggregate voting power of the Company’s outstanding capital stock. See Note 8 – Stockholders’ Equity (Deficit) . Chief Financial Officer Arrangement On June 24, 2026, Robert Winspear resigned as Chief Financial Officer and the Board appointed Craig Cunningham as Chief Financial Officer, effective the same date. Mr. Cunningham provides services to the Company through Provenance Advisors Inc., of which Mr. Cunningham is the controlling shareholder and primary beneficiary pursuant to a consulting arrangement. Provenance Advisors Inc. also provided management advisory services to the Company from July 2025 through Mr. Cunningham’s appointment on June 24, 2026. Amounts paid under that arrangement were $ 0.16 million for the three months ended June 30, 2026, and $ 0.30 million for the six months ended June 30, 2026. Included in those amounts are $ 0.01 million and $ 0.04 million, respectively, for general information technology services provided to the Company by Provenance Advisors Inc. Executive Separation On June 24, 2026, the Board of Directors approved a Separation Agreement with Robert Winspear, under which his employment as Chief Financial Officer ceased effective the same date. The agreement provided for cash payments to 24 Mr. Winspear or on his behalf of $ 0.36 million, consisting of severance payment and certain severance related personal income and employment taxes obligations. Additionally, the Company granted an equity award of 20,000 fully vested, restricted shares of common stock subject to a lock-up, with a grant date fair value of $ 0.33 million. The Company recognized $ 0.71 million, the full cost of the arrangement in the three months ended June 30, 2026. The 20,000 shares were not issued prior to June 30, 2026, and are excluded from shares outstanding at that date. See Note 8 – Stockholders’ Equity (Deficit) . Note 13 – Segment Reporting The Company operates in one reportable segment. The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker (”CODM”). The CODM manages the Company as a single, integrated rare-earth development and supply chain enterprise focused on building a North American mine-to-magnet supply chain for U.S. Protected Markets. The CODM reviews the Company’s consolidated financial statements, including consolidated net loss and total operating expenses, to assess performance and allocate resources across the Company’s development activities. The Company is in the early stage of development and has not established ongoing commercial revenues or positive operating cash flows sufficient to cover operating costs. Accordingly, all resource allocation decisions are made at the consolidated enterprise level. The Company’s operating activities include mineral property exploration (HLREE), rare earth metal and magnet material production (Euclid facility), metallization and processing development (SRC development projects) and administrative functions, all of which are managed as components of a single integrated supply chain strategy. Blackbox.io Inc., the legacy operating subsidiary of Blackbox, was a wholly owned consolidated subsidiary of the Company from February 25, 2026, through May 5, 2026, and its results of operations for that period are included in the Company’s consolidated financial statements. Blackbox.io operated a consumer-facing financial-markets analytics SaaS platform whose products, customers, distribution channels, and regulatory environment were wholly dissimilar to the Company’s integrated rare-earth supply chain. The Company’s Chief Operating Decision Maker did not regularly review the discrete operating results of Blackbox.io for purposes of resource allocation or performance assessment within the Company’s integrated rare-earth supply chain, and accordingly, those operations did not constitute a separate operating segment of the Company under ASC 280. Blackbox.io was deconsolidated effective May 5, 2026. See Note 4 – Blackbox Reverse Recapitalization and Deconsolidation of Blackbox.io, Inc. . 25 Note 14 – Loss per Share The following table reconciles the weighted-average common shares outstanding used in the calculation of basic earnings or loss per common share to the weighted-average common shares outstanding used in the calculation of diluted earnings or loss per common share: Three months Six months ended ended In thousands, except per share data June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025 Numerator: Net loss $ ( 36,818 ) $ ( 2,200 ) ( 143,536 ) ( 3,943 ) Less: Preferred stock dividends accrued - - - - Net income available to common stockholders ( 36,818 ) ( 2,200 ) ( 143,536 ) ( 3,943 ) Numerator for basic and diluted EPS $ ( 36,818 ) $ ( 2,200 ) ( 143,536 ) $ ( 3,943 ) Denominator: Weighted-average common shares outstanding 62,142,617 41,290,000 57,704,321 36,965,956 Diluted weighted-average common shares outstanding 62,142,617 41,290,000 57,704,321 36,965,956 Weighted-average preferred shares outstanding 2,263,845 2,065 1,771,299 1,323 Earnings (loss) per share: Basic $ ( 0.59 ) $ ( 0.05 ) $ ( 2.49 ) $ ( 0.11 ) Diluted $ ( 0.59 ) $ ( 0.05 ) $ ( 2.49 ) $ ( 0.11 ) Excluded Securities: Warrants and options to purchase 2,164,745 and 61,375 shares of common stock, 3,437,411 restricted share units, 567,738 restricted market-based share units, and 378,788 restricted performance share units, and 1,634,999 shares of Series A Preferred Stock were outstanding as of June 30, 2026, but were not included in the computation of diluted EPS because they were anti-dilutive. Note 15 – Subsequent Events The Company has evaluated subsequent events from July 1, 2026, through August 13, 2026, the date the financial statements were issued. The following events are disclosed in accordance with ASC 855, Subsequent Events. 26