Quarterly Report for Quarter Ending May 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to "Texas Mineral Resources Corp," "the Company" "we," "our" or "us" refer to Texas Mineral Resources Corp. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report as well as our Annual Report on Form 10-K for the fiscal year ended August 31, 2025. This Quarterly Report on Form 10-Q may also contain statistical data and estimates we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified their data.

Forward-Looking Statements

This Quarterly Report on Form 10-Q and the exhibits attached hereto contain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q, include, but are not limited to:

	●	the closing of the Agreement and Plan of Merger dated March 4, 2026 ("Merger Agreement") entered into by the Company and USA Rare Earth, Inc ("USAR"), Hamer Merger Sub, Inc., a wholly owned subsidiary of USAR ("Merger Sub 1"), and Hamer Merger Sub, LLC, a wholly owned subsidiary of USAR ("Merger Sub 2");
	●	the progress, potential and uncertainties of the rare-earth exploration plans at our Round Top project in Hudspeth County, Texas (the "Round Top Project," "Project" or "Round Top");
	●	timing for a completed feasibility study, if any, for the Round Top Project;
	●	the success of obtaining the necessary permits for future Round Top drill programs and project development;
	●	success, if any, of Round Top Mountain Development, LLC ("RTMD") in developing the Round Top Project, including without limitation raising sufficient capital to fund any development;
	●	expectations regarding our ability to raise capital and to continue our exploration plans on our properties (either to fund our proportionate expenditures in the Round Top Project as a member of RTMD or otherwise);
	●	our ability to complete a preliminary feasibility study, if at all;
	●	plans regarding anticipated expenditures at the Round Top Project and our ability, if any, to fund anticipated Company expenditures;
	●	plans to enter into a joint venture agreement with Santa Fe and our ability to fund such potential exploration and development project; and
	●	possibility of entering into a mining venture with Steeple Rock and our ability to fund such arrangement.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:

	●	risks of being classified as an "exploration stage" company for purposes of SEC Regulation S-K Item 1300;
	●	risks associated with our ability to continue as a going concern in future periods;
	●	risks associated with our history of losses and need for additional financing;
	●	risks associated with our ability to raise capital on acceptable terms, if at all;
	●	risks associated with our operating history;
	●	risks associated with owning a membership interest in Round Top which may be diluted (which could be significant) if we are unable to fund our cash call obligations and elect to dilute our ownership interest in Round Top in lieu of funding our cash calls per the amended RTMD Operating Agreement (as of May 31, 2026, our membership interest was 18.271%);
	●	risks associated with our properties;
	●	risks associated with the lack of history in producing metals from the Round Top Project;
	●	risks associated with our need for additional financing to fund our cash call obligations with respect to Round Top, as well as the requirement in general for additional capital to further develop, the Round Top Project;
	●	risks associated with owing a minority interest in Round Top;
	●	risks associated with exploration activities not being commercially successful (as there is no assurance that Round Top will be commercially successful);
	●	risks associated with ownership of surface rights and other title issues with respect to the Round Top Project;
	●	risks associated with pursuing a potential Santa Fe joint venture arrangement and ability to finance such potential arrangement;
	●	risks associated with the Steeple Rock non-binding letter of intent regarding a possible mining venture and ability to finance such possible arrangement;
	●	risks associated with increased costs affecting our financial condition;
	●	risks associated with a shortage of equipment and supplies adversely affecting our ability to operate properties;
	●	risks associated with mining and mineral exploration being inherently dangerous;
	●	risks associated with any mineralization estimates;
	●	risks associated with changes in any mineralization estimates affecting the economic viability of the properties;
	●	risks associated with uninsured risks;
	●	risks associated with mineral operations being subject to market forces beyond our control;
	●	risks associated with fluctuations in commodity prices, and in particular rare earth elements and other critical minerals that are necessary for energy transition;
	●	risks associated with permitting, licenses and approval processes;
	●	risks associated with governmental and environmental regulations;
	●	risks associated with future legislation regarding the mining industry and climate change;
	●	risks associated with potential environmental lawsuits;

	●	risks associated with land reclamation requirements;
	●	risks associated with rare earth and mining in general presenting potential health risks;
	●	risks related to competition in the mining and rare earth elements industries;
	●	risks related to macroeconomic conditions, both in the United States and internationally, including without limitation inflation, high interest rates, tariffs and other economic measures implemented by President Trump, and supply chain issues;
	●	risks associated with cybersecurity threats, breaches, and disruptions associated therewith;
	●	risks related to our ability to manage growth;
	●	risks related to the potential difficulty of attracting and retaining qualified personnel;
	●	risks related to our dependence on key personnel;
	●	risks related to conducting our business in order to be excluded from the definition of an "investment company" under the Investment Company Act of 1940;
	●	risks related to ongoing global hostilities, both in Ukraine and the Middle East (Iran and Israel in particular), and other possible international conflicts;
	●	risks related to our United States Securities and Exchange Commission (the "SEC") filing history; and
	●	risks related to our securities.

This list is not exhaustive of the factors that may affect the Company's forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report, as well as in the Annual Report filed on Form 10-K for the fiscal year ended August 31, 2025. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. We qualify all the forward-looking statements contained in this Quarterly Report by the foregoing cautionary statements.

In light of these risks and uncertainties, many of which are described in greater detail elsewhere in this Quarterly Report, as well as in the Annual Report filed on Form 10-K for the fiscal year ended August 31, 2025, there can be no assurance that the events predicted in forward-looking statements contained in the Quarterly Report will in fact transpire.

An investment in our common stock involves significant risks, including the risk of a loss of your entire investment. You should carefully consider the risks and uncertainties described herein before purchasing our common stock. The risks set forth herein are not the only ones facing our Company. Additional risks and uncertainties may exist and others could arise that could also adversely affect our business, financial condition, operations and prospects. If any of the risks set forth herein actually materialize, our business, financial condition, prospects and operations would suffer. In such event, the value of our common stock would decline, and you could lose all or a substantial portion of your investment.

Recent Developments

As previously announced in an 8-K filing with the SEC on March 5, 2026, the Company entered into the Merger Agreement with USAR, Merger Sub 1 and Merger Sub 2. Pursuant to the Merger Agreement, the Company will enter into a series of mergers with Merger Sub 1 and Merger Sub 2 that will result in the business of the Company being held by a wholly owned subsidiary of USAR, and the common stock of the Company being converted into the right to receive the merger consideration described below ("Transaction").

The Merger Agreement provides that, among other things and upon the terms and subject to the conditions found in the Merger Agreement, the following steps will occur as part of a single integrated transaction on the closing date of the Merger ("Closing").

	(a)	Merger Sub 1 will merge with and into the Company (the "First Merger"), the separate existence of Merger Sub 1 will cease, and the Company will be the surviving corporation of the First Merger and a wholly owned subsidiary of USAR;
	(b)	the surviving corporation of the First Merger will merge with and into Merger Sub 2 (the "Second Merger"), the separate existence of that surviving corporation will cease, and Merger Sub 2 will be the surviving company of the Second Merger and a wholly owned subsidiary of USAR that holds all of the assets of the Company;
	(c)	all of the issued and outstanding shares of Company common stock prior to the effective time of the Merger will be converted into the right to receive a fraction of a share of common stock of USAR, determined as described below; and
	(d)	USAR will issue to the holders of Company common stock an aggregate of 3,823,328 shares of USAR common stock, pro rata according to the number of shares of Company common stock owned.

Under the Merger Agreement, each share of Company common stock that is issued and outstanding immediately prior to the effective time of the First Merger (excluding any shares of Company common stock as to which dissenters' rights have been properly exercised and shares of Company common stock owned by USAR, the Company or any of their respective direct or indirect wholly owned subsidiaries) shall automatically be converted into the right to receive that portion of a validly issued, fully paid and nonassessable share of USAR common stock equal to the quotient obtained by dividing (a) 3,823,328 by (b) the aggregate number of shares of Company common stock outstanding on a fully diluted basis at the effective time of the First Merger.

Our board of directors has approved and declared advisable the Merger Agreement and the Transaction and resolved to recommend that our stockholders approve the Merger Agreement, the Transaction and related matters. We expect the Transaction to be consummated after obtaining the required approval by our stockholders and the satisfaction of certain other customary closing conditions, although there can be no assurance that the Transaction will close.

In connection with the execution of the Merger Agreement, the Company and USAR entered into a voting and support agreement (each, a "Voting and Support Agreement") with each member of the Company's board of directors and each of the Company's executive officers. Pursuant to the Voting and Support Agreements, among other things, all of the Company's directors and executive officers agreed to vote all of their shares of Company common stock in favor of the various proposals related to the Transaction and the Merger Agreement and any other matters necessary or reasonably requested by USAR for consummation of the Transaction and against any action reasonably expected to impede, delay or materially and adversely affect the Transaction.

The Merger Agreement contains customary representations, warranties and covenants as well as conditions to Closing. One of the Closing conditions is that the Carlisle mine and related real estate is transferred to Mr. Gorski at or prior to Closing in consideration for the cancellation and discharge of the $75,000 promissory note owed by the Company to Mr. Gorski. Additionally, the Merger Agreement provides for termination rights and sets forth a termination fee equal to $3,250,000 owed by the Company to USAR under certain circumstances.

Our financial statements have been prepared assuming that the Company will continue as a going concern.

Our financial statements have been prepared assuming that the Company will continue as a going concern. The Company has an accumulated deficit from inception through May 31, 2026, of approximately $47,472,000 and has yet to achieve profitable operations, and projects further losses in the development of its business. At May 31, 2026, the Company had a working capital surplus of approximately $2,423,000; however the Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. The Company doesn't expect to generate revenue from operations in the near future.

The Company does not have sufficient capital to fund its portion of the Round Top cash calls expected during the fiscal year ending August 31, 2026 or thereafter. The Company has sufficient cash to fund expected general and administrative expenses and related costs (including costs related to the Merger Agreement and Transaction) through August 31, 2026. During the nine months ended May 31, 2026, we did not fund our $2,257,775 portion of the $12,171,579 total cash call by Round Top, and elected to incur dilution to our Round Top membership interest which was reduced to 18.271% at May 31, 2026. Subsequent to May 31, 2026, pursuant to the June 2026 cash call of $1,708,453 (our portion of the cash call was $311,741), we did not fund our portion, and we elected to incur dilution to our Round Top membership interest which was reduced to 18.265% at June 30, 2026. We have been informed by Round Top that anticipated Round Top capital calls for calendar 2026 could be as much as $50,000,000, to be funded pro-rata by the Company and USAR. The failure of the Company to make required cash calls to Round Top during the remainder of the 2026 calendar year will result in further dilution to our current 18.265% ownership interest. We currently expect to incur continued dilution to our membership interest in Round Top rather than to fund our cash call obligations during the remainder of the 2026 calendar year. There can be no assurance that the Company will be able to raise the necessary capital to fund its cash calls (if it determines not to continue to incur dilution). We have no firm commitments for equity or debt financing and any financing that may be obtained will be on a best efforts basis. Based on these factors, there is substantial doubt as to the Company's ability to continue as a going concern for a period of twelve months from the issuance date of these financial statements. The failure to obtain sufficient financing may cause us to curtail, cease or discontinue operations.

Overview of Round Top Project

We are a mining company engaged in the business of owning, acquiring, exploring and developing mineral properties. As of the filing date of this Form 10-Q, we currently own an 18.265% membership interest in Round Top, which entity holds two mineral property leases with the GLO to explore and develop a 950-acre rare earths project located in Hudspeth County, Texas, known as the Round Top Project. The leases expire in 2030 with provisions for automatic renewal if Round Top is producing in paying quantities (the receipt from the sale of materials exceeds all costs and expenses associated therewith for the prior 12 months). Round Top also holds prospecting permits covering 9,345 acres adjacent to the Round Top Project. The business strategy of Round Top is to develop a metallurgical process to concentrate or otherwise extract the metals from the Round Top Project's rhyolite, conduct additional engineering, design, geotechnical work, and permitting necessary for a bankable feasibility study and then to extract mineral resources from the Round Top Project. There can be no assurance that Round Top will be successful in this endeavor. The Round Top Project has not established as of the date hereof that any of the properties contain any probable mineral reserves or proven mineral reserves under Item 1300 of Regulation S-K nor can there be any assurance that this will occur.

Rare earth elements are a group of chemically similar elements that usually are found together in nature - they are referred to as the "lanthanide series." These individual elements have a variety of characteristics that are critical in a wide range of technologies, products, and applications and are critical inputs in existing and emerging applications. Without these elements, multiple high-tech technologies would not be possible. These technologies include:

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cell phones;

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computer and television screens;

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battery operated vehicles;

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clean energy technologies, such as hybrid and electric vehicles and wind power turbines;

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fiber optics, lasers and hard disk drives;

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numerous defense applications, such as guidance and control systems and global positioning systems; and

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advanced water treatment technology for use in industrial, military and outdoor recreation applications.

Because of these applications, global demand for REE is projected to steadily increase due to continuing growth in existing applications and increased innovation and development of new end uses. Interest in developing resources domestically has become a strategic necessity as there is limited production of these elements outside of China. Our ability to raise additional funds to continue to fund our participation interest in the Round Top Project may be impacted by future prices for REEs.

The Company accounts for its interest in RTMD using the proportionate consolidation method, which is an exception available to entities in the extractive industries, thereby recognizing its pro-rate share of the assets, liabilities, and operations of RTMD in the appropriate classifications in the financial statements.

USA Rare Earth Agreement

In August 2018, the Company and Morzev Pty. Ltd. ("Morzev") entered into an agreement (the "2018 Option Agreement") whereby Morzev was granted the exclusive right to earn and acquire a 70% interest in the Round Top Project by financing $10 million of expenditures in connection with the Project, increasable to an 80% interest for an additional $3 million payment to the Company. In August 2019, the Company and USAR entered into an amended and restated option agreement as further amended in June 2020 (the "2019 Option Agreement" and collectively with the 2018 Option Agreement, the "Option Agreement"), whereby the Company restated its agreement to grant USAR the exclusive right to earn and acquire a 70% interest, increasable to an 80% interest, in Round Top.

In May 2021, and in accordance with the terms of the Option Agreement, the Company and USAR entered into a contribution agreement ("Contribution Agreement") whereby each of the Company and USAR contributed assets to Round Top Mountain Development, LLC ("RTMD"), a wholly-owned subsidiary of the Company, in exchange for their initial ownership interests in RTMD, of which the Company initially owned a membership interest equating to 20% of Round Top and USAR initially owned a membership interest equating to 80% of Round Top. Concurrently therewith, the Company and USAR, as the two members, entered into a limited liability company agreement ("Operating Agreement") governing the operations of RTMD which contains customary and industry standard terms as contemplated by the Option Agreement. USAR is the manager of RTMD.

Upon entry into the Contribution Agreement, the Company assigned the following contracts and assets to RTMD in exchange for its 20% membership interest in RTMD:

	●	the assignment and assumption agreement with respect to the mineral leases from the Company to RTMD;
	●	the assignment and assumption agreement with respect to the surface lease from the Company to RTMD;
	●	the assignment and assumption agreement with respect to the surface purchase option from the Company to RTMD;
	●	the assignment and assumption agreement with respect to the water lease from the Company to RTMD; and
	●	the bill of sale and assignment agreement of existing data with respect to RTMD owned by the Company.

and USAR assigned the following assets to RTMD (or the Company, as applicable) for its 80% membership interest in RTMD:

	●	cash to RTMD to continue to fund Round Top Project operations in the amount of approximately $3,761,750 comprising the balance of the $10 million required expenditure to earn a 70% interest in RTMD;
	●	cash in the amount of $3 million to the Company upon exercise of the USAR option to acquire from the Company an additional 10% interest in RTMD, resulting in the aggregate ownership interest of 80% in RTMD;
	●	bill of sale and assignment agreement of the Pilot Plant to RTMD;
	●	the assignment and assumption regarding relevant contracts and permits with respect to RTMD; and
	●	bill of sale and assignment agreement of existing data and intellectual property owned by USAR to RTMD.

In June 2023, the Company, USAR and the manager amended and restated the Operating Agreement and the following material amendments to the Operating Agreement were adopted:

Cash Calls

On the basis of the adopted program and budget then in effect, the manager will submit to each member monthly cash calls at least 10 days before the last day of each month, and within 10 days of receipt, (a) USAR will pay to RTMD, as an additional capital contribution, its proportionate share of the estimated cash requirements based on its interest and (b) the Company will either (i) pay to RTMD, as an additional capital contribution, its proportionate share of the estimated cash requirements based on its interest, or (ii) deliver to RTMD a written notice indicating what amount, if any, of the applicable estimated cash requirements that the Company will contribute (the "Notice of Non-Contribution"). Failure by the Company to deliver payment of its proportionate share of the estimated cash requirements, as an additional capital contribution, or to deliver a Notice of Non-Contribution within the 10 day period shall automatically be considered a "Deemed Non-Contribution" and shall have the same effect as if the Company provided a timely Notice of Non-Contribution with respect to non-contribution of its entire proportionate share of the applicable cash call.

Remedies for Failure to Meet Cash Calls

Non-Contribution. Capital contributions only will be made to fund programs and budgets. If the Company does not contribute all or any portion of any additional capital contribution that it is required to contribute pursuant to a Notice of Non-Contribution or a Deemed Non-Contribution (such unfunded amount shall be deemed the "Shortfall Amount"), then USAR shall fund the entire Shortfall Amount within 5 business days after the Notice of Non-Contribution or Deemed Non-Contribution.

Dilution. Upon the contribution of the Shortfall Amount by USAR, the interests of the members will be recalculated based on the adjustment provision set forth below in the sub-heading "- Adjustment of Interests".

Maximum Dilution. The dilution of the Company shall not fall below a 3% interest in RTMD (the "Minimum Percentage Interest"). Upon the contribution by USAR of a Shortfall Amount which otherwise would result in a dilution of the Company's interest below the Minimum Percentage Interest, USAR will receive a priority distribution of available cash, in addition to a distribution of available cash to which USAR otherwise is entitled to receive as a result of its proportionate additional capital contribution pursuant to the applicable cash call request, up to the Shortfall Amount that would have resulted in the Company's interest being further diluted but for the Minimum Percentage Interest (the "Priority Distribution"). The Priority Distribution will continue until USAR has been reimbursed for its contribution of the Shortfall Amount that would have resulted in the Company having an interest below the Minimum Percentage Interest, after which time the members shall receive distributions of available cash pro rata in proportion to their respective interests.

Adjustment of Interests. If USAR contributes the Shortfall Amount, then the then current interest of the Company will be reduced (subject to the Minimum Percentage Interest), effective as of each cash call under an additional capital contribution for the applicable program and budget, by a fraction, expressed as a percentage:

	●	the numerator of which equals the Shortfall Amount actually funded by USAR; and
	●	the denominator of which equals the market capitalization of the Company.

Distributions

Cash in excess of authorized reserves will be distributed to the members pro-rata in proportion to their respective interests on a periodic basis as determined by the management committee. RTMD will be required to make tax distributions to each member. Once USAR has been paid the Priority Distribution, if applicable, all distributions made in connection with the sale or exchange of all or substantially all of RTMD's assets and all distributions made in connection with the liquidation of RTMD will be made to the members pro-rata in accordance with their respective interests.

Other material terms of the Operating Agreement that remain unchanged as a result of the June 2023 amendment to the Operating Agreement are as follows:

Management.

A management committee will make the major decisions of RTMD, such as approval of the respective program and budget, and the manager will implement such decisions. The management committee consists of three representatives of the members, with two being appointed by USAR and one by the Company (currently Dan Gorski). The representatives vote the ownership percentage interests of their appointing member.

Management Committee Meetings.

Meetings will be held every three months unless otherwise agreed. For matters before the management committee that require a vote, voting is by simple majority except for certain "major decisions" that require a unanimous vote. So long as the Company maintains a 15% or greater ownership interest, the nine decisions identified in the bullet points below require unanimous approval. If the Company's ownership interest falls below 15%, the number of unanimous decisions is reduced to five (being the first five bullet points below). If the Company is acquired by a REE mining company or sells its ownership interest to a REE mining company, in each case who elects a majority of the Company's board, this unanimous approval requirement can be suspended by USAR, at its option. The major decisions requiring unanimous approval, as set forth above, are:

	●	approval of an amendment to any program and budget that causes the program and budget to increase by 15% or more, except for emergencies;

	●	other than purchase money security interests or other security interests in RTMD equipment to finance the acquisition or lease of RTMD equipment used in operations, the consummation of a project financing or the incurrence by RTMD of any indebtedness for borrowed money that requires the guarantee by any member of any obligations of RTMD;
	●	substitution of a member under certain circumstances and dissolution of RTMD;
	●	the issuance of an ownership interest or other equity interest in RTMD, or the admission of any person as a new member of RTMD, other than in connection with the exercise of a right of first offer by a member;
	●	the redemption of all or any portion of an ownership interest, except for limited circumstances provided for in the Operating Agreement;
	●	a decision to grant authorization for RTMD to file a petition for relief under any chapter of the United States Bankruptcy Code, to consent to such relief in any involuntary petition filed against RTMD by any third party, or to admit in writing any insolvency of RTMD or inability to pay its debts as they become due, or to consent to any receivership of RTMD;
	●	acquisition or disposition of significant mineral rights, other real property or water rights outside of the area of interest as set forth in the Operating Agreement or outside of the ordinary course of business;
	●	the merger of RTMD into or with any other entity; and
	●	the sale of all or substantially all of RTMD's assets.

Manager.

The manager will manage, direct and control operations in accordance with program and budget, will prepare and present to the management committee a proposed program and budget, and will generally oversee and implement all of the day to day activities of RTMD. The manager will conduct necessary equipment and materials procurement and property and equipment maintenance activities, with all operations to be conducted in accordance with adopted program and budget.

Permitted Transfers.

Certain transfers are permitted under the Operating Agreement, including transfers to affiliates or through certain mergers or other forms of business reorganization. A member may also encumber its ownership interest provided that if the ownership interest is foreclosed upon, the other member has a pre-emptive right to acquire such ownership interest at the foreclosure sale. If the transfer is a "permitted transfer," the transferee is automatically admitted as a member; otherwise unless the other member agrees, the transferee is only an economic interest holder with no voting or other rights held by a member.

Right of First Offer.

If a member desires to transfer all or a portion of its ownership interest to a third party (other than a permitted transfer), it may do that without the consent of the other member so long as it gives the other member the first right to purchase its ownership interest on the same terms. If the other member does not elect to purchase the ownership interest on such terms, the member may sell its ownership interest on such terms and the transfer will be a permitted transfer.

Drag-Along Right.

If USAR accepts a bona fide offer to purchase its entire ownership interest and all other rights under the Operating Agreement from an unrelated third party, the Company will then be obligated to sell its entire ownership interest and all other rights under the Operating Agreement to the unrelated third party on the same terms and conditions as are accepted by USAR.

Operations of the Round Top Project.

During the fiscal year ending August 31, 2025, the total cash calls by Round Top, and expenditures in Round Top, was $3,304,829 used primarily to optimize the leaching and developing of the CIX/CIC processing of the Round Top Project. During the nine months ended May 31, 2026, there were cash calls by Round Top totaling $12,171,579 and in June 2026, there was a cash call by Round Top of $1,708,453. We have been informed by Round Top that anticipated Round Top capital calls for calendar 2026 could be as much as $50,000,000, to be funded pro-rata by the Company and USAR. Initial process design work will be carried out at USAR's facility in Wheat Ridge, Colorado. Pending completion of the initial process development, this facility will either be relocated to or replicated at USAR's Oklahoma facility where a pilot plant is expected to be established. It is estimated that the Round Top Project will require additional time and further expenditure to complete a bankable feasibility study. The Company lacks sufficient capital to fund any cash calls during the current fiscal year or thereafter and we expect to incur dilution to our then current membership interest in lieu of funding our Round Top cash calls during 2026.

Other Potential Mining Opportunities

Santa Fe Gold Corporation/Alhambra Project

In November 2021, the Company entered into a mineral exploration and option agreement with Santa Fe Gold Corporation ("Santa Fe"), which agreement was amended in May 2024. Under the option agreement, the Company has the right to pursue a joint venture arrangement with Santa Fe to jointly explore and develop one or more target silver properties to be selected by the Company among patented and unpatented mining claims held by Santa Fe within the project area located in the Black Hawk Mining District in Grant County, New Mexico. Completion of a joint venture agreement, if any, is subject to the successful outcome of a multi-phase exploration plan leading to a bankable feasibility study planned to be undertaken in the near future by the Company. Under the contemplated terms of the proposed joint venture agreement, the Company would be project operator and initially own 50.5% of the joint venture while Santa Fe would initially own 49.5%. Additional terms of the joint venture are to be negotiated between the Company and Santa Fe in the future. There can be no assurance that the Company and Santa Fe will enter into a formal joint venture agreement, that there will be a successful outcome to any multi-phase exploration plan, that we will have the financial resources to fund exploration activities in the future, that any bankable feasibility study will be completed, or that this project will be commercialized.

Under the terms of the option agreement, the Company plans to conduct a district-wide evaluation among the patented and unpatented claims held by Santa Fe, as well as the area of interest, consisting of geologic mapping, sampling, trenching, radiometric surveying, geophysics, drilling and/or other methods as warranted. Based on the district-wide evaluation, the Company would designate a "project area or areas," the size or sizes of which will be decided at the time, and commence development work. The property covered in the option agreement is approximately 1,600 acres and covers approximately 75% of the Black Hawk Mining District. The area to be studied also includes a two-mile radius "area of interest." The term of the option is for so long as the Company continues to conduct exploration activities in the Project Area (although there can be no assurance that the Company will continue to conduct exploration activities in any future period, due to lack of financial resources or otherwise) and can be exercised on 60 days' notice to Santa Fe. During the term of the option and subject to limited exceptions, Santa Fe has agreed not to transfer any portion of its patented and unpatented mining claims within the Black Hawk Mining District without granting the Company the right of first refusal.

Discussions with Steeple Rock

The Company is in discussions with Steeple Rock Holding Company, LLC ("Steeple Rock") to explore the possibility of entering into a mining venture involving (i) four mines, being the Billali mine, the Jim Crow mine, the inactive Imperial mine, and the Carlisle mine, all located on patented mining claims in Grant County, New Mexico, and (ii) certain related assets including a 150 tons per day, unassembled flotation mill located in Duncan, Arizona. The Billali mine, Jim Crow mine and millsite have valid operating permits; the Imperial mine and the Carlisle mine do not.

The initial anticipated capital required for the potential project, in an amount to be determined and agreed upon by the parties, is expected to be used for the initiation of mining and milling operations. There can be no assurance that our preliminary discussions will result in a definitive agreement or, if a definitive agreement is reached, the potential project will proceed on the preliminary and general terms described above or at all. Legal, regulatory, business and financial diligence, along with the procurement of necessary capital to proceed with this potential project in an amount to be determined (of which there can be no assurance the necessary capital can be procured to proceed with this potential project), will need to be satisfactorily completed by the parties, as well as other customary conditions and approvals.

It has been discussed that we may acquire up to a 50.1% interest in this potential project by contribution of the Carlisle mine and by raising the initial capital needed, in an amount to be determined, to assemble the mill and commence development and production.

Carlisle Mine

In December 2024, Dan Gorski, our chief executive officer and a director, assigned all of his ownership interest in the Carlisle mine and related real estate to a wholly-owned subsidiary of the Company in consideration for a $75,000 promissory note, without interest, due and payable by the Company upon demand, secured by the property conveyed. Mr. Gorski acquired the property in 2022 for $75,000. The Carlisle mine and related real estate consist of the following:

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Carlisle Millsite, patent No. 280, described as Section 12, township 17S, range 21W, comprising 5.00 acres, more or less;

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Homestead Lode, patent No. 283, described as Section 12, township 17S, range 21W, comprising 17.91 acres, more or less;

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Columbia Lode, patent No. 284, Described as Section 12, township 17S, range 21W, comprising 19.46 acres, more or less; and

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Carlisle Lode, patent No. 279, described as Section 01, township 17S, range 21W, compromising 20.660 acres, more or less.

If and upon the Closing of the Merger Agreement, the Carlisle mine and related real estate will be conveyed to Mr. Gorski in consideration of the cancellation and discharge of the $75,000 promissory note owed by the Company to Mr. Gorski.

Liquidity and Capital Resources

Recent Convertible Debt Financing

In February 2025, pursuant to the closing of the $1,098,000 of debt financing, the Company issued unsecured promissory notes in the principal amount of $1,098,000 and, as additional consideration for effecting the loans, the Company issued warrants to purchase an aggregate of up to 10,980,000 shares of common stock.

On August 9, 2025, the notes in an aggregate principal amount of $1,098,000 were converted by the holders into an aggregate of 3,660,000 shares of common stock pursuant to the terms of the fixed conversion rate in the notes. As a result of the conversion of the notes in the aggregate principal amount of $1,098,000 into an aggregate of 3,660,000 shares of common stock, these notes were extinguished in full.

During the nine months ended May 31, 2026, (i) holders exercised warrants to purchase 2,100,000 shares of the Company's common stock at an exercise price of $0.30 per share (resulting in the Company receiving aggregate cash consideration of $630,000) and (ii) holders of warrants to purchase 8,880,000 shares of common stock exercised these warrants on a cashless, net issuance exercise basis and were issued 6,187,472 shares of common stock. No warrants issued in connection with the February 2025 transaction remain outstanding.

Transfer of USAR Common Stock by Mr. Gorski to the Company and Subsequent Sale by the Company of the USAR Common Stock

On January 12, 2026, Mr. Gorski (chief executive officer and director of the Company) assigned to the Company 157,686 shares of USAR common stock that were previously issued by USAR to Mr. Gorski, originally as an award of incentive units granted by USAR to Mr. Gorski in May 2020 and subsequently such award of incentive units automatically converted into USAR common stock in connection with the closing of the USAR business combination in March 2025 ("Business Combination"), for his personal services rendered with respect to advancing the Round Top project. These shares of USAR common stock, when issued to Mr. Gorski as an award of incentive units in May 2020, had nominal value. As the result of USAR completing its Business Combination, its shares of common stock commenced trading on The Nasdaq Stock Market LLC and, as such, the market value of the USAR shares transferred to the Company by Mr. Gorski, based on the closing price on the date the shares were actually received by the Company, was approximately $3,480,000 and was recorded as additional paid-in capital. On March 10, 2026, the Company sold these 157,686 shares of USAR common stock for total net proceeds of $2,996,033.

Liquidity

At May 31, 2026, our accumulated deficit was approximately $47,472,000 and our cash position was approximately $2,606,000. We had a working capital surplus of approximately $2,423,000. Round Top has not commenced commercial production on the Round Top Project. We have no revenues from operations and anticipate we will have no operating revenues until production from the Round Top Project, if any, of which there can be no assurance. This property is in the exploration stage.

During the nine months ending May 31, 2026, we did not fund our cash call obligations pursuant to the Operating Agreement. In lieu of funding our $2,257,775 portion of the $12,171,579 total cash call by Round Top during the nine months ended May 31, 2026, we incurred dilution in our membership interest, reducing our membership interest from 18.779% at August 31, 2025 to 18.271% at May 31, 2026. In June 2026, in lieu of funding our $311,741 portion of the June 2026 cash call totaling $1,708,453, we incurred dilution in our membership interest, reducing our membership interest from 18.271% to 18.265% at June 30, 2026. We have been informed by Round Top that anticipated Round Top capital calls for calendar 2026 could be as much as $50,000,000, to be funded pro-rata by the Company and USAR. The Company likely will decide to incur dilution to its then current membership interest in lieu of funding in cash its Round Top budget obligations during the 2026 calendar year, as it currently does not have sufficient capital to fund any cash calls; consequently our ownership interest in the Round Top Project will likely be further diluted during the 2026 calendar year. We will be required to raise additional capital to fund future cash calls from Round Top (unless we elect in lieu of making cash contributions to continue diluting our membership interest percentage, which dilution could be significant, and there can be no assurance that we will be able to raise the necessary capital to fund future Round Top cash calls. We estimate that our current cash position is only sufficient to fund estimated general and administrative expenses (including costs related to the Merger Agreement and Transaction) through August 2026.

While we do not have sufficient cash on hand to fund any portion of the Round Top budget during our current fiscal year and through the end of the 2026 calendar year, we do estimate that we have sufficient capital to fund our estimated general and administrative expenses (including costs related to the Merger Agreement and Transaction) through August 31, 2026. Therefore, we will need to raise additional capital to fund our portion of the Round Top budget if we elect not to dilute our Round Top membership interest. If we elect to dilute our Round Top membership interest (through choice or as a result of the failure to raise capital), such event will result in the dilution to our Round Top membership interest. If we are not able to raise capital to fund our estimated general and administrative expenses past our current fiscal year, we will likely need to curtail operations. The most likely source of future financing presently available to us is through the sale of our securities. Any sale of our shares of common stock will result in dilution of equity ownership to existing stockholders. This means that if we sell shares of common stock, more shares will be outstanding and each existing stockholder will own a smaller percentage of the shares then outstanding. Moreover, the actual or perceived sale of additional shares of our common stock to raise capital could depress the price of our common stock which could adversely impact our ability to raise capital, result in more dilution to be incurred by existing stockholders, and also negatively impact the dilution calculation with respect to our Round Top membership interest. Alternatively, we may rely on debt financing and assume debt obligations that require us to make substantial interest and capital payments. Also, we may issue or grant warrants or options in the future pursuant to which additional shares of common stock may be issued. Exercise of such warrants or options will result in dilution of equity ownership to our existing stockholders. We have no firm commitment with respect to obtaining debt or equity financing and, accordingly, we will be reliant upon a best efforts financing strategy. Accordingly, there is no assurance that we will be able to raise necessary capital, if any, to (i) fund our portion of the Round Top budget during the fiscal year ending August 31, 2026 and through the end of the 2026 calendar year (in the event we decide not to incur dilution to our membership interest) and (ii) fund general and administrative expenses past our current fiscal year, the failure of which would likely cause us to curtail, discontinue or cease our operations.

Results of Operations

Nine months ended May 31, 2026 and May 31, 2025

General and Revenue

We had no operating revenues during the nine months ended May 31, 2026 and May 31, 2025. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $47,472,000 as of May 31, 2026.

Operating expenses, other income (expenses) and resulting losses from Operations.

We incurred exploration costs for the nine months ended May 31, 2026 and May 31, 2025, in the amount of approximately $26,000 and $281,000, respectively. The expenditures for the nine months ended May 31, 2026 and May 31, 2025 were primarily for exploration costs for the Black Hawk project in New Mexico. During the nine months ended May 31, 2026 and May 31, 2025, any exploration expenditures for mining activities at Round Top were funded by RTMD. We account for our interest in RTMD under the proportional consolidation method. Under the proportional consolidation method, we record our share of expenses of RTMD within the income statement in the same line items that we would if we were to consolidate our financial statements with RTMD.

Our general and administrative expenses for the nine months ended May 31, 2026 and May 31, 2025, respectively, were approximately $1,886,000 and $661,000. For the nine months ended May 31, 2026 and May 31, 2025, this amount included approximately $168,000 and $184,000, respectively, in stock-based compensation to directors and Common Stock. The remaining expenditures were primarily for legal fees associated with the Merger Agreement, payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

For the nine months ended May 31, 2026 and May 31, 2025, we earned approximately $34,000 and $15,000, respectively, in interest income from depository accounts. Other expense for the nine months ended May 31, 2026 includes approximately $484,000 as a change in value of our USAR common stock.

For the nine months ended May 31, 2025, we recognized approximately $347,000 in interest expense related to accretion of debt discount recognized on our convertible notes.

We had losses from operations for the nine months ended May 31, 2026 and May 31, 2025 totaling approximately $1,912,000 and $943,000, respectively.

We had net losses for the nine months ended May 31, 2026 and May 31, 2025 totaling approximately $2,362,000 and $1,275,000, respectively.

Three months ended May 31, 2026 and 2025

General and Revenue

We had no operating revenues during the three months ended May 31, 2026 and May 31, 2025. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $47,472,000 as of May 31, 2026.

Operating expenses, other income (expenses) and resulting losses from Operations.

We incurred exploration costs for the three months ended May 31, 2026 and May 31, 2025 in the amount of approximately $6,000 and $256,000, respectively. The expenditures for the three months ended May 31, 2026 and May 31, 2025 were primarily for exploration costs for the Black Hawk project in New Mexico. During the three months ended May 31, 2026 and May 31, 2025, any exploration expenditures for mining activities at Round Top were funded by RTMD. We account for our interest in RTMD under the proportional consolidation method. Under the proportional consolidation method, we record our share of expenses of RTMD within the income statement in the same line items that we would if we were to consolidate our financial statements with RTMD.

Our general and administrative expenses for the three months ended May 31, 2026 and May 31, 2025 were approximately $1,344,000 and $250,000, respectively. For the three months ended May 31, 2026 and May 31, 2025, this amount included approximately $0 and $80,000, respectively, in stock-based compensation to directors. The remaining expenditures were primarily for legal fees associated with the Merger Agreement, payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.

For the three months ended May 31, 2026 and May 31, 2025, we earned approximately $19,000 and $9,000, respectively, in interest income from depository accounts. Other income for the three months ended May 31, 2026 includes approximately $16,000 as a change in value of our USAR common stock.

For the three months ended May 31, 2025, we recognized approximately $307,000 in interest expense related to accretion of debt discount recognized on our convertible notes.

We had losses from operations for the three months ended May 31, 2026 and May 31, 2025 totaling approximately $1,350,000 and $506,000, respectively.

We had net losses for the three months ended May 31, 2026 and May 31, 2025 totaling approximately $1,315,000 and $804,000, respectively.

Investment Company Act Exclusion

Section 3(c)(9) of the Investment Company Act of 1940, as amended ("1940 Act"), provides that a company "substantially all of whose business consists of owning or holding oil, gas, or other mineral royalties or leases, or fractional interests therein, or certificates of interest or participation in or investment contracts relative to such royalties, leases, or fractional interests" is not an investment company within the meaning of the 1940 Act. The Company has determined that this exemption applies to it giving consideration to the following four factors:

	●	whether the exempted activity constitutes "substantially all" of our business;
		○	The Company has owned mineral leases (or a certificate of interest or participation in or investment contract relative to the mineral leases) since 2010, substantially all of our business from 2010 until May 2021 consisted of owning and developing the mineral leases and, after the May 2021 "farm-down" of our 100% interest in the mineral leases, substantially all of our business consists of owning and holding a certificate of interest or participation in or investment contract relative to the mineral leases now owned by RTMD (of which we are a member). The Company's mineral assets historically, as well as the value of the certificate of interest at May 31, 2026, have been booked at cost in accordance with GAAP. We have an accumulated deficit of approximately $47,472,000 at May 31, 2026 as a result of owning and developing the Round Top Project.
	●	whether we own or trade in the mineral leases;
		○	The Company has owned the mineral leases, which are now owned by RTMD, since 2010 and neither the Company nor RTMD is in the business of dealing or trading in the mineral leases.
	●	what qualifies as an eligible asset for purposes of the exception; and
		○	The statute specifically references mineral leases and our mineral leases were owned by the Company and are now owned by RTMD. In accordance with Regulation S-K Item 1300 that governs disclosure by registrants engaged in mining operations, the definition of mineral resource is "a concentration or occurrence of material of economic interest in or on the Earth's crust." Our rare earth elements and minerals underlying the mineral leases meet that definition, as well as does coal, silver, gold and other material mined for economic value by registrants involved in mining operations. The SEC staff has recognized that an excepted entity can also engage in related business activities such as exploring, developing, and operating the eligible assets.
	●	what qualifies as a "certificate of interest or participation in" or an "investment contract relative to" the eligible assets.
		○	The statute allows a Company to own a "certificate of interest" or "participation in" the mineral leases. The SEC staff has recognized that limited partnership interests and/or similar securities issued by entities that themselves own the leases constitute "certificate of interest or participation in or investment contracts" related to such leases. The Company's 18.271% membership interest in RTMD as of May 31, 2026 constitutes a "certificate of interest or participation in" or "an investment contract relative to" the mineral leases that are owned by RTMD.

The Company intends to continue to conduct its business operations in order to continue to be excluded from the definition of an "investment company" under the 1940 Act.

Off-Balance Sheet Arrangements

None.

Critical Accounting Estimates

Management's discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. Preparation of financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the related disclosures of contingencies. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are fairly presented in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.