USA Rare Earth, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) USA Rare Earth, Inc. Condensed Consolidated Balance Sheets June 30, 2026 December 31, 2025 (In thousands) ASSETS Current assets Cash and cash equivalents $ 1,530,147 $ 359,925 Accounts receivable 6,270 3,764 Inventories 50,138 18,535 Prepaid expenses 12,347 2,865 Other assets, current 73,687 286 Total current assets 1,672,589 385,375 Property, plant and equipment, net 146,751 86,449 Mineral interests 17,339 17,339 Goodwill 134,848 134,848 Other intangible assets, net 65,899 68,612 Equipment deposits 46,904 1,879 Operating lease right-of-use assets 2,151 321 Deferred arrangement costs 912,091 — Other assets, non-current 255 176 Total assets $ 2,998,827 $ 694,999 LIABILITIES, MEZZANINE AND STOCKHOLDERS' EQUITY Liabilities Current liabilities Accounts payable $ 17,367 $ 11,069 Accrued liabilities 31,679 14,073 Contract liabilities, current 1,328 10,500 Note payable — 1,849 Finance leases, current 290 283 Operating leases, current 350 137 Total current liabilities 51,014 37,911 Deferred grant income 8,482 8,200 Finance leases, non-current 445 592 Operating leases, non-current 2,111 185 Earnout liability — 108,671 Warrant liability 364,189 19,534 Deferred tax liability 15,665 16,715 Contract liabilities, non-current 9,602 — Total liabilities 451,508 191,808 Commitments and contingencies (Note 5) Mezzanine equity 12 % Series A Cumulative Convertible Preferred Stock subject to possible redemption 10,347 8,905 Total mezzanine equity 10,347 8,905 Stockholders' equity Common stock 24 15 Accumulated other comprehensive (loss) income ( 927 ) 130 Additional paid-in capital 3,003,612 879,848 Accumulated deficit ( 464,681 ) ( 387,360 ) Non-controlling interest ( 1,056 ) 1,653 Total stockholders' equity 2,536,972 494,286 Total liabilities, mezzanine equity, and stockholders' equity $ 2,998,827 $ 694,999 See Accompanying Notes to Condensed Consolidated Financial Statements USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 1 Table of Contents USA Rare Earth, Inc. Condensed Consolidated Statements of Operations and Comprehensive Loss Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands, except per share) Revenue $ 5,821 $ — $ 11,519 $ — Cost of revenue 7,404 — 12,996 — Gross loss ( 1,583 ) — ( 1,477 ) — Operating expenses: Selling, general and administrative 32,607 6,227 53,782 13,256 Research and development 10,768 2,577 25,017 4,266 Amortization of intangible assets 1,356 — 2,713 — Total operating expenses 44,731 8,804 81,512 17,522 Loss from operations ( 46,314 ) ( 8,804 ) ( 82,989 ) ( 17,522 ) Other income (expense), net Interest income 370 765 472 952 Dividend income 14,581 — 26,449 — Grant income 240 — 446 — (Loss) gain on fair market value of financial instruments, net 22,418 ( 134,662 ) ( 21,135 ) ( 74,362 ) Interest expense and other expense, net ( 3,771 ) ( 12 ) ( 4,364 ) ( 99 ) Total other income (expense), net 33,838 ( 133,909 ) 1,868 ( 73,509 ) Loss before income taxes ( 12,476 ) ( 142,713 ) ( 81,121 ) ( 91,031 ) Benefit from income taxes ( 513 ) — ( 1,090 ) — Net loss ( 11,963 ) ( 142,713 ) ( 80,031 ) ( 91,031 ) Net loss attributable to non-controlling interest ( 1,630 ) ( 207 ) ( 2,709 ) ( 357 ) Net loss attributable to USA Rare Earth, Inc. $ ( 10,333 ) $ ( 142,506 ) $ ( 77,322 ) $ ( 90,674 ) Other comprehensive loss, net of tax Foreign currency translation adjustments ( 727 ) — ( 1,057 ) — Comprehensive loss attributable to USA Rare Earth, Inc. $ ( 11,060 ) $ ( 142,506 ) $ ( 78,379 ) $ ( 90,674 ) Net loss per share attributable to USA Rare Earth, Inc.: Basic and diluted $ ( 0.05 ) $ ( 1.54 ) $ ( 0.37 ) $ ( 0.99 ) Number of shares used in per share calculations: Basic and diluted 230,081 92,769 213,347 91,598 See Accompanying Notes to Condensed Consolidated Financial Statements USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 2 Table of Contents USA Rare Earth, Inc. Condensed Consolidated Statements of Mezzanine Equity Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Shares Amount Shares Amount Shares Amount Shares Amount (In thousands) 12 % Series A Cumulative Convertible Preferred Stock Beginning balance 1,224 $ 9,614 5,233 $ 32,397 1,224 $ 8,905 2,739 $ 21,173 USARE LLC Convertible Preferred unit dividends — — — — — — 84 1,082 Issuance of preferred stock, net of issuance costs — — — — — — 2,279 11,745 Shares issued in reverse recapitalization — — — — — — 131 1,527 Deferred offering costs — — — — — — — ( 3,237 ) Deemed dividend and accretion to redemption value — 733 — 11,569 — 1,442 — 11,676 Conversions — — ( 1,519 ) ( 18,724 ) — — ( 1,519 ) ( 18,724 ) Ending balance 1,224 $ 10,347 3,714 $ 25,242 1,224 $ 10,347 3,714 $ 25,242 Subscription Receivable Beginning balance $ — $ — $ — $ ( 1,250 ) Shares issued in reverse recapitalization — — — 1,250 Ending balance $ — $ — $ — $ — Total Mezzanine Equity Beginning balance 1,224 $ 9,614 5,233 $ 32,397 1,224 $ 8,905 2,739 $ 19,923 Ending balance 1,224 10,347 3,714 25,242 1,224 10,347 3,714 25,242 See Accompanying Notes to Condensed Consolidated Financial Statements USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 3 Table of Contents USA Rare Earth, Inc. Condensed Consolidated Statements of Stockholders' Equity Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Shares Amount Shares Amount Shares Amount Shares Amount (In thousands) Common Stock Beginning balance 217,976 $ 22 81,952 $ 8 148,055 $ 15 60,091 $ 6 USARE LLC Convertible Preferred unit dividends — — — — — — 182 — Shares issued in reverse merger recapitalization — — — — — — 21,679 2 Conversion of 12 % Series A Cumulative Convertible Preferred Stock — — 2,610 — — — 2,610 — Investor warrants exercised — — 3,051 1 10 — 3,051 1 Conversion of Earnout liability 10,100 1 — — 10,100 1 — — PIPE financing — — 8,550 1 69,767 7 8,550 1 Government grant program 16,133 1 — — 16,133 1 — — Other issuances 462 — 26 — 606 — 26 — Ending balance 244,671 $ 24 96,189 $ 10 244,671 $ 24 96,189 $ 10 Additional Paid-In Capital Beginning balance $ 2,332,912 $ 24 $ 879,848 $ 104,244 Equity-based compensation 5,248 — 10,187 241 Deemed dividend - preferred accretion to redemption value ( 733 ) ( 11,569 ) ( 1,442 ) ( 11,676 ) Conversions of 12 % Series A Cumulative Convertible Preferred Stock — 18,724 — 18,724 Common stock issuance — 353 — 353 Warrant exercises — 38,469 255 38,469 PIPE financing — — 1,499,993 — PIPE financing costs — — ( 51,003 ) — Government grant program 451,394 — 451,394 — Conversion of earnout liability 215,827 — 215,827 ( 99,639 ) Forward purchase agreement — 269 — 50 Transaction bonus — — — 841 Extinguishment of note payable — — — 1,506 Reverse recapitalization — — — ( 6,843 ) Other ( 1,036 ) — ( 1,447 ) — Ending balance $ 3,003,612 $ 46,270 $ 3,003,612 $ 46,270 Accumulated Other Comprehensive Loss Beginning balance $ ( 200 ) $ — $ 130 $ — Translation adjustment ( 727 ) — ( 1,057 ) — Ending balance $ ( 927 ) $ — $ ( 927 ) $ — Subscription Receivable Beginning balance $ — $ ( 17,187 ) $ — $ — Forward purchase agreements prepayment — — — ( 20,389 ) Early termination of forward purchase agreements — 17,120 — 20,391 Accretion of forward purchase agreements — 67 — ( 2 ) Ending balance $ — $ — $ — $ — Accumulated Deficit Beginning balance $ ( 454,349 ) $ ( 37,994 ) $ ( 387,360 ) $ ( 72,872 ) Shares issued in reverse merger recapitalization — — — ( 16,954 ) Dilution of non-controlling interest — ( 24 ) — ( 24 ) Other 1 — 1 — Net loss attributable to USA Rare Earth, Inc. ( 10,333 ) ( 142,482 ) ( 77,322 ) ( 90,650 ) Ending balance $ ( 464,681 ) $ ( 180,500 ) $ ( 464,681 ) $ ( 180,500 ) Non-Controlling Interest Beginning balance $ 574 $ 2,493 $ 1,653 $ 2,643 Net loss attributable to non-controlling interest ( 1,630 ) ( 207 ) ( 2,709 ) ( 357 ) Ending balance $ ( 1,056 ) $ 2,286 $ ( 1,056 ) $ 2,286 Total Stockholders’ Equity (Deficit) Beginning balance 217,976 $ 1,878,959 81,952 $ ( 52,656 ) 148,055 $ 494,286 60,091 $ 34,021 Ending balance 244,671 2,536,972 96,189 ( 131,934 ) 244,671 2,536,972 96,189 ( 131,934 ) See Accompanying Notes to Condensed Consolidated Financial Statements USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 4 Table of Contents USA Rare Earth, Inc. Condensed Consolidated Statements of Cash Flows Six Months Ended June 30, 2026 2025 (In thousands) Cash flows from operating activities: Net loss $ ( 80,031 ) $ ( 91,031 ) Adjustments to reconcile net loss to cash used in operating activities Equity-based compensation expense 11,003 1,282 Depreciation 1,579 135 Amortization of other intangible assets 2,713 — Amortization of right of use assets 293 202 Foreign currency transactions ( 139 ) — Loss on fair market value of financial instruments 21,135 74,362 Other non-cash adjustments 14 2,099 Changes in operating assets and liabilities: Accounts receivable ( 2,506 ) — Inventories ( 26,428 ) — Prepaid and other assets ( 18,661 ) ( 1,035 ) Accounts payable 7,465 ( 2,785 ) Accrued and other liabilities 8,320 ( 1,364 ) Deferred tax liability ( 1,050 ) — Contract liabilities 548 — Lease liability 139 ( 103 ) Deferred grants 282 — Net cash used in operating activities ( 75,324 ) ( 18,238 ) Cash flows from investing activities: Capital expenditures and equipment deposits ( 108,388 ) ( 6,297 ) Net cash used in investing activities ( 108,388 ) ( 6,297 ) Cash flows from financing activities: Proceeds from issuance of USARE LLC Preferred units — 23,250 Payment of issuance cost for USARE LLC Preferred units — ( 400 ) IPXX contribution of capital through merger — 22,867 Prepayment of Forward Purchase Agreements — ( 20,789 ) Proceeds from termination of Forward Purchase Agreements — 20,789 Payment of securities issuance costs ( 51,003 ) ( 8,281 ) Payment of issuance cost for PIPE financing — ( 4,822 ) Proceeds from issuance of common stock under PIPE financing 1,500,000 75,000 Payment of deferred government loan costs ( 27,745 ) — Proceeds from exercise of warrants 68 21,951 Repayment of revolving credit facility ( 1,849 ) — Payments on financed leases ( 140 ) — Net cash provided by financing activities 1,419,331 129,565 Effect of exchange rate differences on cash, cash equivalents and restricted cash ( 1,175 ) — Net change in cash, cash equivalents and restricted cash 1,234,444 105,030 Cash, cash equivalents and restricted cash, beginning of year 359,925 16,761 Cash, cash equivalents and restricted cash, end of period $ 1,594,369 $ 121,791 See Accompanying Notes to Condensed Consolidated Financial Statements USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 5 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Organization USA Rare Earth, Inc. (collectively with its subsidiaries, the “Company,” “USARE,” “we,” “us,” or “our”) is building a leading global rare earth value chain, from mine to magnet and beyond. The Company intends to secure, reshore, and grow the materials intelligence and production technologies required to stand up a resilient rare earth industry. This advanced industrial operating system should strengthen supply-chain security for the national defense, manufacturing and technology of the United States (“U.S.”) and its allies. The Company’s plan is to build an integrated platform to encompass the entire rare earth value chain: extraction and separation of rare earth oxides; conversion of oxides into metals, alloys and strip-cast; and production of sintered neodymium-iron-boron (“NdFeB”) permanent magnets, which the Company refers to as “neo magnets.” This capability should address the supply-chain vulnerabilities created by China’s current dominance of rare earth processing, and metal and magnet manufacturing. During the year ended December 31, 2025, the Company completed two significant transactions: a business combination and an acquisition. On March 13, 2025, the Company consummated a business combination with USA Rare Earth, LLC pursuant to a Business Combination Agreement with Inflection Point Acquisition Corp. II, as a result of which the Company became a publicly traded corporation listed on Nasdaq under the symbol “USAR.” The transaction was accounted for as a reverse recapitalization, with USA Rare Earth, LLC treated as the accounting acquirer. The historical financial statements of USA Rare Earth, LLC became the historical financial statements of the Company upon consummation of the merger. As a result, the financial statements in this quarterly report reflect (i) the historical operating results of USA Rare Earth, LLC prior to the merger; (ii) the combined results of Inflection Point Acquisition Corp. II and USA Rare Earth, LLC following the close of the merger; (iii) the assets and liabilities of USA Rare Earth, LLC at their historical cost; and (iv) USA Rare Earth, LLC’s equity structure for all periods presented, as affected by the recapitalization presentation after completion of the merger. On November 18, 2025, the Company acquired Indian Ocean Rare Metals Pte. Ltd., the parent of Less Common Metals Ltd. (“Less Common Metals”), a rare earth metal and alloy manufacturer based in Cheshire, United Kingdom. The acquisition was accounted for as a business combination and the results of Less Common Metals have been included in the Company’s consolidated financial statements beginning on the acquisition date. For a complete description of both transactions, including the purchase price allocation, assets acquired, liabilities assumed, and related accounting policies, refer to Note 2 , “Merger Transaction and Acquisition,” of the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Annual Report”) filed with the SEC on March 30, 2026. Basis of Presentation The accompanying Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The December 31, 2025 Condensed Consolidated Balance Sheet was derived from audited financial statements and does not include all disclosures, including notes, required by GAAP; however, the Company believes the disclosures included are adequate to make the information presented not misleading. The June 30, 2026 unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in the 2025 Annual Report. The unaudited Condensed Consolidated Financial Statements include all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the Company’s financial condition, results of operations and cash flows for the periods presented. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 6 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. References to a year refer to the Company’s fiscal years ended on December 31 of the specified year. Reclassifications Certain prior period amounts have been reclassified in the Condensed Consolidated Balance Sheets and certain notes to the Condensed Consolidated Financial Statements to conform to the current period presentation. These reclassifications had no effect on the Company’s previously reported financial position, results of operations and comprehensive loss, mezzanine and stockholders' equity, net loss per share, or cash flows. Principles of Consolidation The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries, as well as variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated. Use of Estimates The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the financial statement date and the reported amounts of expenses during the reporting period. Significant estimates include goodwill and other intangible assets arising from business combinations, asset and liability valuations, including earnout and warrant liabilities, deferred taxes and related valuation allowances, and other fair value measurements. These estimates involve inherent uncertainties and the exercise of judgment; therefore, actual results could differ materially from those estimates if assumptions or underlying circumstances change. Significant Accounting Policies For a detailed description of the Company’s Significant Accounting Policies, please refer to the Company’s 2025 Annual Report. Recently Adopted Accounting Pronouncemen t In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities . This ASU applies to business entities that receive government grants and addresses the accounting for cash and non-monetary grants, including forgivable loans, while excluding tax abatements, income tax credits, and exchange transactions. The ASU requires recognition of government grants when there is reasonable assurance that the entity will comply with the conditions attached to the grants and the grants will be received. The amendments permit income‑related grants to be presented as either other income or a reduction of related expenses, and asset‑related grants to be recorded as deferred income or as a reduction of the asset’s cost basis. This ASU is effective for fiscal years beginning after December 15, 2028, and interim periods within those fiscal years, with early adoption permitted. The ASU permits adoption using a modified prospective, modified retrospective, or full retrospective transition method. The Company early adopted the ASU effective January 1, 2026, using the modified prospective approach. Under this transition method, the guidance is applied to transactions occurring on or after the adoption date, and prior-period amounts are not adjusted. Adoption of the standard did not have a material impact on the Company’s financial position, results of operations, cash flows, or related disclosures. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 7 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Recently Issued Accounting Pronouncements Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses . This ASU requires additional disclosures that disaggregate income statement expense line items, including (i) the amounts of purchased inventory, employee compensation, depreciation, amortization, and other related costs and expenses; (ii) a qualitative description of costs and expenses not disaggregated quantitatively; and (iii) the definition and total amount of selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The ASU should be applied prospectively; however, retrospective application is permitted for all prior periods presented. The Company is currently evaluating the impact of adopting this ASU on its financial reporting disclosures. In January 2025, the FASB issued ASU 2025-01, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date . This ASU amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting this ASU on its financial reporting disclosures. In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements , which improves and clarifies interim reporting requirements under U.S. GAAP. The ASU compiles required interim disclosures, including disclosure of material changes since the last annual reporting period, to improve consistency and navigability. This ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The ASU should be applied prospectively, although retrospective application is permitted for all prior periods presented. The Company is currently evaluating the impact of adopting this ASU on its financial reporting disclosures. Note 2. Fair Value Measurements U.S. GAAP defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price), and establishes a fair value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority): • Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. • Level 2 — Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means. • Level 3 — Prices or valuation techniques requiring inputs that are both significant to the fair-value measurement and unobservable. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 8 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Money Market Funds During February 2026, the Company began investing a portion of its cash balances in institutional floating-Net Asset Value (“NAV”) prime money market funds. The fair value of the Prime money market funds approximates their carrying amounts due to the highly liquid, short-term nature of the underlying financial assets. Any minor unrealized gains or losses resulting from daily NAV fluctuations are recorded within Other income (expense), net on the Condensed Statement of Operations and Comprehensive Loss. Level June 30, 2026 December 31, 2025 (In thousands) Money market funds Level 1 $ — $ 353,841 U.S. Government money market funds Level 1 755,518 — Prime money market funds Level 1 728,455 — Total money market funds (included in Cash and cash equivalents) $ 1,483,973 $ 353,841 Level 3 Fair Value of Financial Instruments on a Recurring Basis The following table presents the Company’s Level 3 financial liabilities measured at fair value on a recurring basis. The Company has no Level 3 financial assets measured at fair value on a recurring basis. June 30, 2026 December 31, 2025 (In thousands) Liabilities Earnout liability $ — $ 108,671 Warrant liabilities Series A Warrant 40,690 19,534 Government Grant Warrant 323,499 — Total Warrant liabilities 364,189 19,534 Total $ 364,189 $ 128,205 Level 3 Valuation and Reconciliation Earnout Liability The Company valued the earnout liability using a Monte Carlo simulation model which includes Level 3 unobservable inputs. The following table summarizes the significant inputs used to value the earnout liability as of the dates indicated. In the second quarter of 2026, all contingent conditions required for the conversion of earnout shares were satisfied, and the shares were subsequently distributed to their holders at a fair value of $ 215.8 million on the date of conversion. June 30, 2026 December 31, 2025 Share price (1) $ 11.90 Expected volatility (1) 70.1 % Risk-free interest rate (1) 3.70 % Remaining term (in years) (1) 5.2 (1) As of June 30, 2026, all earnout shares had been distributed and there were no shares outstanding. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 9 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the reconciliation of the earnout liability measured at fair value on a recurring basis for the dates indicated. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands) Balance, beginning of period $ 145,080 $ 46,232 $ 108,671 $ — Establishment of liability at March 13, 2025 — — — 99,639 Unrealized loss in estimated fair value (1) 70,747 53,775 107,156 368 Conversion of earnout shares (2) ( 215,827 ) — ( 215,827 ) — Balance, end of period $ — $ 100,007 $ — $ 100,007 (1) The “Unrealized loss in estimated fair value” is recognized in (Loss) gain on fair market value of financial instruments, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. (2) In the second quarter of 2026, all contingent conditions required for the conversion of earnout shares were satisfied, and the shares were subsequently distributed to their holders. The amount represents the fair value of the earnout liability on the date of conversion. Series A Warrant Liability The Company valued the Series A Warrant liability using a Monte Carlo simulation model which includes Level 3 unobservable inputs. The following table summarizes the significant inputs used to value the Series A Warrant liability as of the dates indicated. June 30, 2026 December 31, 2025 Share price $ 21.58 $ 11.90 Exercise price $ 7.00 $ 7.00 Expected volatility 68.1 % 67.3 % Risk-free rate 4.1 % 3.6 % Dividend yield — % — % Put term (in years) 3.7 4.2 The following table presents the reconciliation of the Series A Warrant liability measured at fair value on a recurring basis for the dates indicated. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands) Balance, beginning of period $ 26,491 $ 34,475 $ 19,534 $ — Establishment of liability at March 13, 2025 — — — 40,652 Unrealized loss in estimated fair value (1) 14,199 35,758 21,343 29,581 Warrant exercises — ( 16,518 ) ( 187 ) ( 16,518 ) Balance, end of period $ 40,690 $ 53,715 $ 40,690 $ 53,715 (1) The “Unrealized loss in estimated fair value” is recognized in (Loss) gain on fair market value of financial instruments, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 10 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Government Grant Warrant Liability The Company valued the Government Grant Warrant liability using a Black-Scholes-Merton simulation model which includes Level 3 unobservable inputs. The following table summarizes the significant inputs used to value the Government Grant Warrant liability as of the dates indicated. See Note 13, “Government Grants – U.S. Department of Commerce CHIPS Act Awards,” for additional information related to the Government Grant Warrant liability. June 30, 2026 June 3, 2026 Share price $ 21.58 $ 27.98 Exercise price $ 17.17 $ 17.17 Expected volatility 79.4 % 79.7 % Risk-free rate 4.4 % 4.4 % Dividend yield — % — % Put term (in years) 9.9 10.0 The following table presents the reconciliation of the Government Grant Warrant liability measured at fair value on a recurring basis for the dates indicated. Three and Six Months Ended June 30, 2026 (In thousands) Balance, beginning of period $ — Establishment of liability at June 3, 2026 430,862 Unrealized gain in estimated fair value (1) ( 107,363 ) Balance, end of period $ 323,499 (1) The “Unrealized gain in estimated fair value” is recognized in (Loss) gain on fair market value of financial instruments, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Note 3. Other Financial Information Inventories Inventories consist of materials, labor, and manufacturing overhead and are stated at the lower of weighted‑average cost or net realizable value. The following table presents inventories as of the dates indicated. June 30, 2026 December 31, 2025 (In thousands) Raw materials $ 30,361 $ 16,391 Work-in-process 16,235 913 Finished goods 3,542 1,231 Total inventories $ 50,138 $ 18,535 USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 11 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Prepaid Expenses and Other Assets, Current The following table presents prepaid expenses and other assets, current as of the dates indicated. June 30, 2026 December 31, 2025 (In thousands) Prepaid expenses Prepaid insurance $ 2,037 $ 728 Engineering and consulting costs 70 2,137 Supplier advances 8,899 — Other 1,341 — Total prepaid expenses $ 12,347 $ 2,865 Other assets, current Restricted cash (1) $ 64,222 $ — Other 9,465 286 Total other assets, current $ 73,687 $ 286 (1) Restricted cash represents funds held in escrow and legally restricted pursuant to the terms of the escrow agreement, which requires the amounts to be reserved for the development of the Blacksburg, South Carolina property. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 12 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Property, Plant and Equipment, Net The following table presents the components of the Company’s property, plant and equipment, net, as of the dates indicated. Property, plant and equipment balances include the effects of foreign currency translation adjustments related to the Company’s non‑U.S. operations, which are recorded in Accumulated other comprehensive (loss) income on the accompanying Condensed Consolidated Balance Sheet. June 30, 2026 December 31, 2025 (In thousands) Land $ 707 $ 707 Land improvements 611 403 Buildings 7,078 7,038 Building improvements 28,640 2,566 Manufacturing equipment 26,331 12,404 Lab equipment 5,111 3,724 Automobiles 51 — Leasehold improvements 1,278 795 Furniture & fixtures 72 46 Computer equipment 269 13 Construction in progress - Buildings (1) 54,225 30,267 Construction in progress - Magnet plant equipment and other (1) 24,623 29,083 Property, plant and equipment, gross 148,996 87,046 Less: Accumulated depreciation ( 3,165 ) ( 1,640 ) Property, plant and equipment, net 145,831 85,406 Finance lease right-of-use assets 1,233 1,233 Less: Accumulated amortization ( 313 ) ( 190 ) Finance lease-right-of-use assets, net 920 1,043 Total property, plant and equipment, net $ 146,751 $ 86,449 (1) Construction in progress assets are placed in service and depreciated upon completion of construction, installation, certification, and when ready for their intended use. Depreciation and amortization of property, plant and equipment is calculated using the straight‑line method over the estimated useful lives of the related assets. The following table presents depreciation expense related to the Company’s property, plant and equipment and amortization expense related to the Company’s finance lease right‑of‑use assets for the periods indicated. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands) Depreciation expense $ 950 $ 108 $ 1,579 $ 135 Amortization expense 62 61 123 67 Total depreciation and amortization $ 1,012 $ 169 $ 1,702 $ 202 USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 13 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Other Intangible Assets The following table presents the Company’s other intangible assets, by major class, as of the dates indicated. June 30, 2026 December 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (In thousands) Trade name $ 7,245 $ ( 302 ) $ 6,943 $ 7,245 $ ( 60 ) $ 7,185 Customer relationships 11,856 ( 370 ) 11,486 11,856 ( 74 ) 11,782 Supplier relationships 33,986 ( 2,124 ) 31,862 33,986 ( 425 ) 33,561 Know-how 16,203 ( 595 ) 15,608 16,203 ( 119 ) 16,084 Total other intangible assets $ 69,290 $ ( 3,391 ) $ 65,899 $ 69,290 $ ( 678 ) $ 68,612 The following table presents amortization expense related to the Company’s other intangible assets for the periods indicated. There was no intangible amortization for the three and six months ended June 30, 2025. Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 (In thousands) Trade name $ 121 $ 242 Customer relationships 148 296 Supplier relationships 849 1,699 Know-how 238 476 Total amortization of other intangible assets $ 1,356 $ 2,713 The following table presents estimated future amortization expense of finite‑lived intangible assets as of June 30, 2026. Year Ending December 31, Finite-lived Intangible Assets (In thousands) 2026 (remaining six months) $ 2,715 2027 5,428 2028 5,428 2029 5,428 2030 5,428 2031 and thereafter 41,472 Total estimated amortization $ 65,899 USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 14 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Accrued Liabilities The following table presents accrued liabilities as of the dates indicated. June 30, 2026 December 31, 2025 (In thousands) Payroll and related employee taxes $ 3,545 $ 2,659 Construction in progress 14,550 6,302 Consulting 3,778 883 Legal 2,518 1,668 Financing costs 2,167 — Asset retirement obligation (1) 690 700 Other 4,431 1,861 Total accrued liabilities $ 31,679 $ 14,073 (1) The Company recorded certain Asset Retirement Obligations (“ARO”), in connection with the Company’s obligation to return its Cheshire, United Kingdom building to its “original condition,” as defined in the lease agreement. The building lease will expire in November 2026 and the estimated cost is expected to be paid at lease expiration. The following table presents the ARO activity for the periods indicated. There were no ARO valuation adjustments for the three and six months ended June 30, 2025. Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 (In thousands) Balance, beginning of period $ 689 $ 700 Foreign currency translation 1 ( 10 ) Balance, end of period $ 690 $ 690 Contract Liabilities The Company’s contract liabilities consist of customer deposits and deferred revenue when cash payments are received in advance of the Company’s performance. As of June 30, 2026, the Company evaluated its remaining performance obligations associated with its contract liabilities. The related revenue is expected to be recognized as performance obligations are satisfied over the remaining contract terms, with amounts expected to be recognized within the next 12 months classified as contract liabilities, current and amounts expected to be recognized thereafter classified as contract liabilities, non-current. June 30, 2026 December 31, 2025 (In thousands) Contract liabilities, current $ 1,328 $ 10,500 Contract liabilities, non-current 9,602 — Total contract liabilities $ 10,930 $ 10,500 USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 15 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the activity related to contract liabilities for the dates indicated. There was no contract liability activity for the three and six months ended June 30, 2025. Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 (In thousands) Balance, beginning of period $ 10,377 $ 10,500 Contract liabilities related to acquisition — ( 26 ) Revenue recognized related to amounts included in balance, beginning of period ( 798 ) ( 798 ) Cash received, excluding amounts recognized as revenue during the period 1,341 1,345 Translation adjustments 10 ( 91 ) Balance, end of period $ 10,930 $ 10,930 Notes Payable The following table presents notes payable as of the dates indicated. June 30, 2026 December 31, 2025 (In thousands) Barclays Trade Loan $ — $ 1,849 On February 13, 2026, the Company repaid the outstanding Barclays Trade Loan balance in full, including accrued interest, to Barclays Bank PLC, and the loan was cancelled upon repayment. The following table presents interest expense related to the Company’s notes payable for the periods indicated. There was no interest expense related to the Company’s notes payable during the three months ended June 30, 2026 and 2025. Six Months Ended June 30, 2026 2025 (In thousands) Hatch Note (1) $ — $ 54 Barclays Trade Loan (2) 103 — Total interest expense $ 103 $ 54 (1) The Hatch Note was extinguished on March 13, 2025. (2) The Barclays Trade Loan was repaid in full on February 13, 2026. Supplemental Cash Flow Information Cash and Non-cash Transactions Six Months Ended June 30, 2026 2025 (In thousands) Cash Transactions Cash paid for interest $ 103 $ — Non-cash Transactions Purchases of property and equipment in accounts payable and other accrued liabilities $ 3,169 $ — USARE LLC Convertible Preferred unit dividends — 3,042 Finance right of use assets obtained in exchange for finance lease liabilities — 1,233 Non-cash lease liabilities arising from obtaining right of use assets 2,000 427 Issuance of Government Grant Warrants 430,862 — USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 16 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Reconciliation of Cash, Cash Equivalents and Restricted Cash The Condensed Consolidated Statements of Cash Flows explain the changes in the total of cash and cash equivalents, and restricted cash. The following table presents a reconciliation of cash and cash equivalents, and restricted cash reported for each period within the Condensed Consolidated Balance Sheets and the Condensed Consolidated Statements of Cash Flows that sum to the total of such amounts. June 30, 2026 June 30, 2025 December 31, 2025 (In thousands) Cash and cash equivalents $ 1,530,147 $ 121,791 $ 359,925 Restricted cash (included in Other assets, current) 64,222 — — Cash, cash equivalents and restricted cash $ 1,594,369 $ 121,791 $ 359,925 Note 4. Variable Interest Entity Round Top Mountain Development Round Top Mountain Development, LLC (“RTMD”) is a variable interest entity (“VIE””), has mining rights at Round Top Mountain in the State of Texas, and is developing processing technology to process the rare earth minerals to be mined at Round Top Mountain. On May 17, 2021, the Company completed the acquisition of 80 % of the equity interests of RTMD, pursuant to a contribution agreement among the Company, Texas Mineral Resources Corp. (“TMRC”), and RTMD, whereby TMRC and the Company contributed their respective rights and interests in Round Top Mountain to RTMD in exchange for equity ownership. Concurrently, the Company, TMRC, and RTMD entered into a limited liability company agreement of RTMD which documented the governance of RTMD. This acquisition resulted in the consolidation of RTMD and the recognition of a noncontrolling interest representing TMRC’s equity interest. On March 4, 2026, the Company entered into a definitive Agreement and Plan of Merger with TMRC. On August 7, 2026, the Company closed the acquisition of TMRC, to which the Company acquired 100 % of the outstanding shares of TMRC. The transaction is valued at approximately $ 73.9 million based on the closing price of the Company’s common stock on the August 7, 2026. The aggregate merger consideration consists of approximately 3.8 million shares of the Company’s common stock, with cash paid in lieu of fractional shares. Subsequent to the closing, the Company will be the sole operator and 100 % economic beneficiary of the “Round Top Project,” which consists of our operations and rights related to Round Top Mountain and the Round Top Mountain heavy rare earth element (“HREE”) metals deposit (the “Round Top Deposit”). The transaction is intended to secure full ownership control of the project, and streamline operations, governance and decision-making. Under the amended and restated limited liability company agreement of RTMD, prior to the above forementioned acquisition of TMRC, in the event that TMRC does not fund its share of mandatory capital contributions called for by the Company as the manager of RTMD, the Company is obligated to cover the shortfall by making additional capital contributions to RTMD (or in the event that the Company does not fund, the capital call will be withdrawn). If the Company does fund the capital contribution, additional equity interests in RTMD will be issued to the Company and TMRC will be proportionally diluted in accordance with the terms of the amended and restated limited liability company agreement. TMRC’s failure to fund its share of mandatory capital contributions called under the agreement during the six months ended June 30, 2026 has caused the Company’s ownership interest in RTMD to be increased by 40 basis points. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 17 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The following table presents the ownership percentages of the Company and TMRC and the changes in ownership percentages as of the dates indicated. June 30, 2026 December 31, 2025 Ownership Change (Basis points) USA Rare Earth, Inc. 81.7 % 81.3 % 40 Texas Mineral Resources Corp. 18.3 % 18.7 % ( 40 ) The following table presents the assets and liabilities of RTMD that are included in the Company’s Condensed Consolidated Balance Sheets as of the dates indicated. June 30, 2026 December 31, 2025 (In thousands) ASSETS Cash and cash equivalents $ — $ 38 Prepaid expenses 100 106 Operating lease right-of-use assets 418 321 Mineral interests 17,339 17,339 Property, plant and equipment, net 698 201 Equipment deposits 63 — Other assets, non-current 28 27 Total assets $ 18,646 $ 18,032 LIABILITIES Accounts payable $ 1,068 $ 61 Accrued liabilities 2,514 469 Finance leases, current 233 137 Finance leases, non-current 188 185 Total liabilities $ 4,003 $ 852 RTMD did not record depletion expense for the mineral interests for the three and six months ended June 30, 2026 and 2025. RTMD’s creditors have no recourse against the Company for the RTMD consolidated liabilities included within the Company’s Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025. The assets of the consolidated VIE can only be used to settle the obligations of the consolidated VIE and not the obligations of the Company. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 18 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 5. Commitments and Contingencies Potential Future Environmental Contingency The Company's planned exploration and development activities are subject to various federal and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally have become more restrictive. The Company conducts its operations to protect public health and the environment and believes its current operations are materially in compliance with all applicable laws and regulations. As the Company's mining activities have not yet commenced, the Company has made, and expects to make, expenditures to comply with applicable environmental laws and regulations. The ultimate amount of reclamation and site-restoration costs to be incurred for future mining operations is unknown and uncertain as of June 30, 2026. Litigation From time to time, the Company may become subject to legal proceedings, claims or litigation arising in the ordinary course of business. In addition, the Company may receive notices alleging infringement of patents or other intellectual property rights. The outcomes of any legal proceedings, claims, notices or litigation are subject to uncertainty, and any claims against the Company, whether meritorious or not, can be time-consuming, result in costly litigation, require significant management time, create negative perceptions with communities, stakeholders, and government agencies and result in the diversion of significant operational resources. If an unfavorable outcome was to occur in any proceeding, claim or litigation, the Company could be adversely affected in the period in which they are resolved and the impact could be material to the Company’s business, financial condition, cash flow or results of operations, depending on the specific circumstances of the outcome. The Company accrues loss contingencies when it is both probable that the Company will incur the loss and when it can reasonably estimate the amount of the loss or range of loss. Kelley Complaint On October 16, 2025, Jill Kelley filed an action in New York Supreme Court against USA Rare Earth, LLC (Case No. 659163/2025 (N.Y. Sup.)) alleging a breach of a 2019 Consulting Agreement resulting from a purported partial payment of the obligations thereunder. Kelley also asserts claims for breach of a duty of good faith and fair dealing and unjust enrichment based on the same conduct underlying the alleged breach of the Consulting Agreement. During the first quarter of 2026, the Company proposed to settle the matter. The Company determined that the proposed settlement consideration, consisting of cash, cash payments in lieu of equity awards, and interest, was both probable and reasonably estimable and, accordingly, recorded an estimated loss contingency of approximately $ 0.4 million in the accompanying Condensed Consolidated Balance Sheet. Subsequent to June 30, 2026 and through the date of this Report, the settlement agreement has not been finalized. Any settlement, if consummated, will not constitute an admission of liability by the Company. MP Materials Corp. On May 22, 2026, MP Materials Corp., MP Magnetics LLC, and MP Mine Operations LLC (collectively, “Plaintiffs”) filed an action in the Business Court of Texas, Eighth Division against USA Rare Earth, Inc., its Director of Magnet Operations, Kevin Elkins, and FOM Technologies Inc. (Case No. 26-BC08A-0018), alleging misappropriation of trade secrets under the Texas Uniform Trade Secrets Act, breach of contract, tortious interference, and unjust enrichment. Plaintiffs seek a temporary and permanent injunction against further alleged use and possession of their allegedly protected technology, unspecified monetary damages, and attorneys’ fees. The Company disputes the allegations and intends to vigorously defend against such claims. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 19 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Leases On December 17, 2025, the Company entered into a lease for office and warehouse space in Wheat Ridge, Colorado, to support the Company’s research and development activities. The lease commenced on January 1, 2026 and expires on March 31, 2028. Total minimum lease payments over the lease term are $ 224 thousand, excluding variable costs such as taxes and common area maintenance. Under Accounting Standards Codification (“ASC”) 842, Leases (“ASC 842”) , a right‑of‑use asset and lease liability have been recognized as of January 1, 2026. On February 27, 2026, the Company entered into a non-cancelable operating lease for office space in Washington, D.C. to support general and administrative functions. The Company obtained control of the premises on April 1, 2026 for the purpose of performing leasehold improvements, which represents the lease commencement date under ASC 842. While the lease commenced on April 1, 2026, fixed rent payments commence on July 1, 2026, and the lease expires on August 31, 2032. Total minimum lease payments over the lease term are $ 2.5 million, excluding variable costs such as taxes and common area maintenance. A right‑of‑use asset and lease liability were recognized as of April 1, 2026. Purchase Commitments The Company enters into non-cancelable purchase orders in the ordinary course of business for inventory and capital equipment. Commitments for inventory are generally short-term in nature. Capital equipment commitments are generally fulfilled within one year, with certain long lead time items extending beyond one year. As of June 30, 2026, the Company had open equipment purchase orders of $ 14.7 million which will be fulfilled later than one year from the reporting date. Note 6. Mezzanine and Stockholders' Equity The following table presents the number of shares of Common Stock and Preferred Stock authorized and outstanding as of the dates indicated. Shares Outstanding Class of Stock Authorized Par Value June 30, 2026 December 31, 2025 (In thousands, except par value) Common stock 750,000 $ 0.0001 244,671 148,055 Preferred stock 12 % Series A Cumulative Convertible Preferred Stock (1) 15,000 $ 0.0001 1,224 1,224 Undesignated preferred stock 35,000 $ 0.0001 — — Total preferred stock 50,000 $ 0.0001 1,224 1,224 Total authorized 800,000 (1) The liquidation value was $ 10.3 million and $ 8.9 million on June 30, 2026 and December 31, 2025, respectively. $ 1.50 Billion Private Investment In Public Equity (“PIPE”) On January 27, 2026, the Company closed a $ 1.50 billion private placement in the form of a PIPE (the “$1.50B PIPE”) with multiple investors. The Company issued 69.8 million shares of common stock on January 28, 2026 for gross proceeds of $ 1.50 billion and received net proceeds of $ 1.45 billion after deducting financing costs. The net proceeds are included in Cash and cash equivalents , and the 69.8 million shares issued are reflected in Common stock and Additional paid-in capital . U.S. Department of Commerce CHIPS Act Agreements On June 3, 2026, in connection with the Company's CHIPS Act agreements with the U.S. Department of Commerce (the “Dept. of Commerce”), the Company issued 16,132,790 shares of common stock and warrants to purchase 17,600,584 shares of common stock. See Note 13, “Government Grants – U.S. Department of Commerce CHIPS Act Awards,” for additional information regarding these instruments and the related accounting. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 20 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 7. Equity-Based Compensation Stock-based Compensation Expense The following table presents stock‑based compensation expense for the periods indicated. Three Months Ended June 30, Six Months Ended June 30, Incentive Plan 2026 2025 2026 2025 (In thousands) Restricted stock units (1) 2024 Incentive Plan $ 5,989 $ — $ 10,864 $ — Performance restricted stock units 2024 Incentive Plan 75 — 139 — Incentive units Legacy Incentive Plan — — — 441 Class A units (1) Legacy Incentive Plan — — — 841 Total $ 6,064 $ — $ 11,003 $ 1,282 (1) In the six months ended June 30, 2025, USARE LLC recorded equity-based compensation for issuance of its Class A Units to certain consultants pursuant to existing bonus agreements. In the six months ended June 30, 2025, USARE LLC recorded the forfeiture of equity-based compensation of the Company’s former CEO. Note 8. Income Taxes Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands, except percentages) Loss before income taxes $ ( 12,476 ) $ ( 142,713 ) $ ( 81,121 ) $ ( 91,031 ) Benefit from income taxes ( 513 ) — ( 1,090 ) — Effective tax rate 1.3 % — % The Company is subject to taxation in the United States, the United Kingdom, France, and various state jurisdictions. The Company’s effective tax rate of 1.3 % is calculated quarterly based upon current assumptions relating to the full year’s estimated operating results and various tax-related items. Each quarter, the estimated annual effective tax rate is updated if the Company revises its forecast of earnings based upon its operating results. If there is a change in the estimated effective annual tax rate, a cumulative adjustment is recorded. The difference between the effective tax rate of 1.3 % and the U.S. federal statutory rate of 21.0 % for the six months ended June 30, 2026, respectively, was due to changes in the valuation allowance, which entirely offsets the Company's net deferred tax assets in the United States, and the amortization of the identifiable intangible assets accounted for in purchase accounting. As of June 30, 2026, the Company determined that, based on an evaluation of all available positive and negative evidence, including cumulative losses and the Company's latest forecasts, it was more likely than not that the Company's deferred tax assets in the United States would not be realized and, therefore, the Company continued to record a full valuation allowance. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 21 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 9. Net Loss per Share The following table presents the computation of the numerator and denominator used in the calculation of net loss per share attributable to holders of the Company’s common stock. For the three and six months ended June 30, 2026 and 2025, all potentially dilutive securities were excluded from diluted earnings per share as the Company reported a net loss for the period. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (In thousands, except for per share amounts) Numerator Net loss attributable to USA Rare Earth, Inc. $ ( 10,333 ) $ ( 142,506 ) $ ( 77,322 ) $ ( 90,674 ) Declared and deemed dividends, and interest accretion ( 733 ) — ( 1,442 ) — Undistributed net loss attributable to USA Rare Earth, Inc. $ ( 11,066 ) $ ( 142,506 ) $ ( 78,764 ) $ ( 90,674 ) Denominator Weighted-average shares outstanding - basic and diluted 230,081 92,769 213,347 91,598 Net loss per share attributable to USA Rare Earth, Inc. Basic and diluted $ ( 0.05 ) $ ( 1.54 ) $ ( 0.37 ) $ ( 0.99 ) The following table presents categories of potential shares that are excluded from the diluted per share computation as their effect would be anti-dilutive. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Shares in thousands) 12 % Series A Cumulative Convertible Preferred Stock (1) 2,443 6,595 2,443 6,595 Series A Warrants 2,437 6,130 2,437 6,130 Earnout Shares (2) — 10,100 — 10,100 Investor Warrants (3) — 18,369 — 18,369 Incentive Units — 10,714 — 10,714 Government Grant Warrants 17,601 — 17,601 — Total 22,481 51,908 22,481 51,908 (1) Represents the amount of potential common shares, if converted at each reported date. (2) Represents contingently issuable shares outstanding at each reported date. (3) Investor warrants outstanding as of June 30, 2025 were fully exercised during 2025 and are therefore excluded from the June 30, 2026 table. Note 10. Segment Reporting The Company operates in a single reportable operating segment encompassing its vertically integrated rare earth element magnet production and supply chain. The Company’s chief operating decision maker (“CODM”) is the Company’s chief executive officer. The CODM assesses performance and allocates resources primarily on the basis of consolidated net loss and total assets, which are reported on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss and Condensed Consolidated Balance Sheets, respectively. The CODM does not regularly review discrete segment revenue or expense categories beyond the consolidated financial statements for purposes of evaluating performance or allocating resources. Accordingly, the Company has not presented additional quantitative disclosures of significant segment expenses, as such information is not regularly provided to the CODM. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 22 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Because the Company operates in a single reportable segment and the measures used by the CODM are consistent with the consolidated financial statements, no reconciliation is required between segment measures and the consolidated amounts. Note 11. Concentrations Disaggregation of Revenue All of the Company’s revenue is derived from sales of casting and strip casting. The following table presents United States (“domestic”) and international (“foreign”) revenue, based on the customers’ “shipped to” address. No revenue was reported in the three and six months ended June 30, 2025. Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 (In thousands) United States $ 1,742 $ 2,702 International 4,079 8,817 Total revenue $ 5,821 $ 11,519 Major Customers The following table presents the customers that account for 10% or more of the Company’s revenue. Concentration of revenue between a limited number of customers shifts regularly, depending on when revenue is recognized. The percentages by customer reflect specific relationships or contracts that would concentrate revenue for the period presented and do not indicate a trend specific to any one customer. No revenue was reported in the three and six months ended June 30, 2025. Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 Customer 1 26 % 37 % Customer 2 29 % 23 % Customer 3 23 % 18 % Customer 4 18 % 17 % All other customers (1) 3 % 5 % (1) Includes individual customers that each accounted for less than 10% of total revenue. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 23 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 12. Merger Transaction and Acquisition Earnout Share Conversion In connection with the business combination between the Company and USA Rare Earth, LLC, the Company agreed to issue common stock of the Company (the “earnout shares”) to certain shareholders of USA Rare Earth, LLC in two tranches upon the occurrence of certain triggering events. • On April 15, 2026, the Company achieved the market-price condition for the first tranche of earnout shares, as the Company's common stock was equal to or exceeded $ 15.00 per share for at least 20 out of 30 consecutive trading days. As a result, 5.05 million earnout shares were converted into shares of the Company’s common stock. • On May 15, 2026, the Company achieved the market-price condition for the second tranche of earnout shares, as the Company's common stock was equal to or exceeded $ 20.00 per share for at least 20 out of 30 consecutive trading days. As a result, 5.05 million earnout shares were converted into shares of the Company’s common stock. The earnout shares were classified as liabilities and remeasured at fair value on a recurring basis prior to conversion which resulted in a fair value gain on conversion of $ 70.7 million and $ 107.2 million in the three and six months ended June 30, 2026, respectively, presented in (Loss) gain on fair market value of financial instruments, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Upon conversion, the related earnout liability was reclassified to common stock and additional paid‑in capital. See Note 2, “Fair Value Measurements – Earnout Liability” for a reconciliation of the conversion of the Earnout liability. Definitive Carester SAS Investment On April 9, 2026, the Company entered into a binding letter of intent, and subsequently on July 23, 2026, the Company entered into a definitive agreement to acquire a 13.6 % equity interest in Carester SAS (“Carester”), the parent company of Caremag SAS, for cash and equity consideration amounting to € 40.0 million, or approximately $ 45.7 million. The proposed consideration consists of € 28.3 million in cash, or approximately $ 32.4 million, and € 11.7 million in equity consideration, or approximately $ 13.3 million, payable in shares of the Company’s common stock, in each case subject to customary adjustments, including the potential substitution of cash in lieu of the Company’s common stock. The number of shares of the Company’s common stock to be issued will be determined based on the market price of the Company’s common stock on the closing date of the transaction. As a result, the actual U.S. dollar value of the cash and equity consideration, when translated from euros to U.S. dollars, may differ from the estimated amounts described above. Proposed SVRE Holdings Ltd. Acquisition On April 19, 2026, the Company entered into a definitive agreement to acquire 100 % of SVRE Holdings Ltd., the parent company of Serra Verde Group (“Serra Verde”), for $ 300.0 million in cash and 126.8 million shares of the Company’s common stock (approximately $ 2.53 billion) for total expected consideration of approximately $ 2.83 billion, as of the date of the definitive agreement. This acquisition is subject to customary conditions. Serra Verde operates a rare earths project in Brazil that is currently in commercial production. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 24 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 13. Government Grants U.S. Department of Commerce CHIPS Act Awards On June 3, 2026 (the “Award Date”), the Company entered into a Direct Funding Agreement (the DFA”) and a Loan Guarantee Agreement (the “LGA”) with the U.S. Department of Commerce (the “Dept. of Commerce”) pursuant to the CHIPS and Science Act of 2022 (the “CHIPS Act”). In connection with the execution of these agreements, the Company also entered into a Securities Issuance Agreement with the Dept. of Commerce pursuant to which the Company issued shares of its common stock and warrants to purchase shares of its common stock as conditions precedent to the DFA and LGA, respectively. As a condition precedent to the DFA, the Company issued to the Dept. of Commerce 16,132,790 shares of its common stock on the Award Date. The shares were measured at fair value based on the Company’s closing stock price of $ 27.98 per share on the Award Date, resulting in an aggregate fair value of approximately $ 451.4 million. As a condition precedent to the LGA, the Company issued to the Dept. of Commerce a warrant to purchase up to 17,600,584 shares of its common stock (the “Warrant”) at an exercise price of $ 17.17 per share. The Warrant issued under the LGA was initially measured at fair value of $ 430.9 million ($ 24.48 per Warrant share) on the Award Date based on an independent third-party valuation. Together, the combined fair values for the common stock issued under the DFA and the Warrants issued under the LGA of $ 882.3 million are treated as the total cost incurred to obtain access to the funding arrangement under the CHIPS Act, and along with other financing costs, are recognized as Deferred arrangement costs in the Condensed Consolidated Balance Sheets. Direct Funding Agreement The DFA provides for up to $ 277.0 million in direct funding from the Dept. of Commerce to support the construction and development of domestic rare earth and critical minerals projects (the “Projects”). Receipt of funding under the DFA is contingent upon the Company satisfying various contractual milestones, conditions, and approval requirements. Management evaluates these conditions on an ongoing basis and assesses the probability of achieving the required milestones and ultimately receiving the related funding. Based on this assessment, the Company concluded that recognition of the deferred equity cost (included in the Deferred arrangement costs on the Condensed Consolidated Balance Sheets) at Award Date remains appropriate as of June 30, 2026. In addition, the DFA contains customary representations, covenants, and conditions, including restrictions on stock buybacks and dividends for a five-year period following the Award Date, minimum liquidity requirements, and clawback provisions applicable upon milestone failure or breach of authorized purpose. The deferred equity cost asset will remain on the balance sheet until direct funding award disbursements are received. Upon receipt of approved cash disbursements, the Company will record a credit to additional paid in capital and reduce a proportionate share of the deferred equity cost with an offset to additional paid in capital. As of June 30, 2026, the Company had not received any direct funding award disbursements, nor had it received formal approval for any disbursement requests.. The common stock issued to the Dept. of Commerce is subject to a one-year lock-up period from the Award Date. The Dept. of Commerce’s voting rights with respect to the shares are restricted to the greatest extent permissible under applicable law. Loan Guarantee Agreement The LGA provides for a loan guarantee by the Dept. of Commerce of up to $ 1.30 billion in borrowings by the Company from the Federal Financing Bank (“FFB”) to fund a portion of the capital costs of the Projects. Advances (“loan disbursements”) under the LGA are subject to milestone-based conditions precedent and are non-revolving. Each loan disbursement has a 15-year maturity from the award date. The interest rate applicable to each loan disbursement is based upon the U.S. Treasury securities at each draw down date plus 150 basis points. The LGA contains customary affirmative and negative covenants, including restrictions on the incurrence of additional indebtedness, maintenance of certain financial ratios, and requirements applicable to the use of proceeds. The Company will account for each loan disbursement as debt under ASC 470, Debt . As of June 30, 2026, no advances had been drawn under the LGA. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 25 Table of Contents USA Rare Earth, Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) The initial fair value of the Warrant was recorded under Warrant liability with an offset to deferred financing costs (included in Deferred arrangement costs in the Condensed Consolidated Balance Sheet). Subsequent changes in the fair value of the warrant liability are recognized in earnings as a component of other income (expense) and do not adjust the deferred financing costs. See Note 2, “Fair Value Measurements – Government Grant Warrant Liability,” for the valuation methodology, significant unobservable inputs, and the roll forward of the warrant liability for the three and six months ended June 30, 2026. The Warrant has a ten-year term commencing on the Award Date and is exercisable, in whole or in part, beginning on the first anniversary of the Award Date. At expiration, to the extent not previously exercised, the Warrant is deemed automatically exercised on a net-share (cashless) basis. The Warrant includes a holder-elected redemption right upon the occurrence of a Business Combination (as defined in the Warrant), the Dept. of Commerce may require the acquirer to purchase all or a portion of the Warrant at a price equal to the amount the Dept. of Commerce would receive in respect of the underlying Warrant shares in a hypothetical liquidation of the Company at fair market value, payable by wire transfer of immediately available funds. Because this holder-elected cash settlement alternative is available even in a Business Combination in which common shareholders receive non-cash consideration, the cash settlement is not assured to be in the same form as the consideration received by common shareholders, and any such Business Combination would be outside the sole control of the Company, the Warrant does not meet the criteria for equity classification. The Warrant was immediately issued as a condition precedent to the LGA commitment and is fully exercisable after 1 year, the Warrant is not linked to a specific loan disbursement. Therefore, the Warrant was issued to obtain access to the credit facility provided under the LGA rather than in connection with the issuance of a specific loan disbursement. Debt issuance costs associated with the LGA, comprising 1) the initial fair value of the Warrant, 2) the 2.0 % upfront loan commitment fee of $ 26.0 million, 3) a 2.0 % annual ticking fee, paid quarterly, based on the unutilized LGA commitment amount, and 4) directly attributable legal and advisory costs, are deferred as a loan commitment asset and will be reclassified as a debt discount against each FFB note as advances are drawn, and subsequently amortized to interest expense over the term of the applicable note using the effective interest method. Upon exercise or redemption, in whole or in part, or expiration, the Warrant liability is remeasured to fair value immediately prior to settlement, with the change in fair value recognized in earnings. The portion of the liability settled is then derecognized with a corresponding entry to equity (for net-share settlement) or against cash or other assets (for cash settlement under the holder-elected redemption right). Note 14. Subsequent Events Hooton Park Acquisition On July 2, 2026, the Company purchased its currently leased Less Common Metals. Ltd. manufacturing site, including land and building (also referred to as “Hooton Park”), for approximately £ 7.0 million, or approximately $ 9.3 million. The Company is currently completing the accounting for the acquisition, including a preliminary assessment of environmental remediation obligations associated with the property. Based on information currently available, management expects certain environmental liabilities to be recognized in connection with the acquisition; however, the amount and timing of any such obligations remain subject to further analysis and may change materially as the valuation and environmental review are finalized. USA Rare Earth, Inc. | Q2'2026 Quarterly Report (Form 10-Q) | 26 Table of Contents