REalloys Inc.

05/20/2026 | Press release | Distributed by Public on 05/20/2026 15:18

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

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, the unaudited Condensed Consolidated Financial Statements and the notes thereto included in this Quarterly Report on Form 10-Q ("Form 10-Q"), and the Consolidated Financial Statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Current Report on Form 8-K/A filed on May 12, 2026, and in Blackbox's Annual Report on Form 10-K for the year ended December 31, 2025 ("Form 10-K"). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under "Part II. Item 1A. Risk Factors" and elsewhere in this Form 10-Q, "Part I. Item 1A. Risk Factors" and elsewhere in our Form 10-K, "Part I. Item 1A Risk Factors" and elsewhere in our Form S-4 (File No. 333-286507). See also "Cautionary Note Regarding Forward-Looking Statements."
Forward-Looking Statements
Certain statements made in this report, as well as oral statements made by the Company from time to time, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Readers can identify these forward-looking statements by our use of the words "expects," "anticipates," "estimates," "potential," "believes," "projects," "intends," "plans," "aims," "will," "may," "shall," "could," "should," "opportunity," "goal," "objective," "target," "milestone" and similar words and other statements of a similar sense. These statements are based on our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given. These forward-looking statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) the impact of competitive pressures; (2) the inability to attract and retain skilled employees and effectively plan for succession, while maintaining our unique corporate culture; (3) economic, political, and other risks; (4) the challenges in integrating and achieving expected results from acquired businesses; (5) uncertainty surrounding our future capital needs; (6) information security breaches and other cybersecurity threats; (7) the failure to comply with laws or regulations relating to data privacy, data protection, AI, or other automated technologies; (8) challenges in accurately forecasting our financial results due to seasonal and cyclical variations in customer purchasing patterns and economic and market volatility; (9) potential impairment charges with respect to our investments or acquired intangible assets; (10) exposure to additional tax liabilities, increases and fluctuations in our effective tax rate, and other tax matters; (11) business disruptions from natural or man-made disasters, public health crises, or other events outside our control; and (12) stock price volatility.
Unless the context requires otherwise, "REalloys," the "Company," "we," "us" and "our" refer to REalloys Inc. and its consolidated subsidiaries.
Overview
REalloys is a U.S.-based rare earth minerals and materials company building a vertically integrated North American "mine-to-magnet" supply chain for U.S. Protected Markets, including defense, aerospace, energy, electronics and advanced industrial applications. Our strategy pairs strategic upstream rare earth resources with downstream metallization and magnet materials manufacturing-both located in North America-to provide a secure, transparent and traceable alternative to the Chinese-dominated supply chain.
We operate through two principal subsidiaries:
•Strategic Metals Development Corp. ("Strategic Metals") holds a 100% interest in the Hoidas Lake Project, an exploration-stage rare earth property in northern Saskatchewan comprising 14 contiguous dispositions over approximately 12,522 hectares. The property is enriched in the magnet rare earths neodymium and praseodymium. Historical reports referenced 963,808 tonnes of measured, 1,597,027 tonnes of indicated and 2,560,835 tonnes of inferred mineralization; these historical estimates are not classified as mineral resources or reserves under S-K 1300, and economic viability has not been established.
•PMT Critical Metals Inc. ("PMTCM"), acquired on March 31, 2025, operates the Euclid Facility, which produces rare earth metals, alloys and NdFeB magnet materials for customers including the U.S. Defense Logistics Agency, the U.S. Department of Energy's Ames National Laboratory and industrial magnet customers.
Agreement and Plan of Merger
On March 10, 2025, REalloys Inc. (formerly known as Blackbox; "REalloys" or the "Company") and its wholly owned subsidiary, RABLBX Merger Sub, Inc., ("RABLBX"), entered into an Agreement and Plan of Merger, as amended by that certain Amendment No. 1 ("Amendment No. 1"), dated as of July 1, 2025, Amendment No. 2 ("Amendment No. 2"), dated as of August 22, 2025, and Amendment No. 3 ("Amendment No. 3") dated as of December 10, 2025 (collectively, the "Merger Agreement"), with REalloys Solutions Inc. (formerly known as REalloys Inc.; "Private REalloys"). In accordance with the Merger Agreement, RABLBX merged with and into Private REalloys, with Private REalloys surviving as a wholly owned subsidiary of the Company. On February 24, 2026, (i) pursuant to an amendment to its Articles of Incorporation, the Company changed its name from "Blackbox" to "REalloys Inc.", (ii) pursuant to an amendment to its Articles of Incorporation, Private REalloys changed its name to "REalloys Solutions Inc.", and (iii) REalloys and RABLBX filed the Certificate of Merger with the State of Nevada (the "Merger"). On February 24, 2026, the Merger closed (the "Closing" and such date, the "Closing Date").d. The quarter reflects 33 days of consolidated Blackbox operations (February 25 through March 31, 2026).
Option Exercise
On May 5, 2026, we entered into an option exercise agreement with Gust Kepler (the "Option Exercise Agreement" and such exercise, the "Option Exercise"). Previously, on February 24, 2026, pursuant to that certain Option Agreement, dated as of February 24, 2026 (the "Option Agreement"), upon exercise of the Put Right (as defined therein), Mr. Kepler was required to transfer an aggregate of 1,084,999 shares of Company's Series A Preferred Stock, par value $0.001 (the "Series A Preferred Stock") held by Mr. Kepler in exchange for the Company transferring an aggregate of 3,269,998 shares of Series A Preferred Stock of Blackbox.io, Inc., which represents all of the Series A Preferred Stock of Blackbox.io, Inc. owned by us. Following the Option Exercise, Blackbox.io ceased to be a subsidiary of the Company.
Underwritten Public Offering - March 2026
On March 9, 2026, we completed an underwritten public offering of 2,702,702 shares of our common stock at a public offering price of $18.50 per share and the Underwriters purchased shares pursuant to the underwriting agreement at a price per Share of (i) $17.39 in connection with 2,349,037 Shares sold to investors sourced by the Underwriters and (ii) $18.2225 for 353,665 Shares sold to investors sourced by the Company. . We received gross proceeds of $50.0 million and net proceeds of approximately $46.8 million, after underwriting discounts and commissions of approximately $2.7 million and offering expenses. We granted the underwriters a 30-day option to purchase up to 396,963 additional shares on the same terms to cover over-allotments; the option expired unexercised on April 8, 2026.
Effective March 5, 2026, and in connection with the offering, we terminated the at-the-market equity program inherited from Blackbox, under which 260,000 shares had been sold for gross proceeds of approximately $2.2 million from inception through February 19, 2026. We do not intend to resume sales under the program.
We agreed to a 60-day lock-up on additional equity issuances, which expired on May 8, 2026, and granted the lead underwriter a 180-day right to participate in certain future financings, which remains in effect through September 5, 2026.
Preferred Share Conversion and Deconsolidation of Blackbox.io, Inc.
On April 14, 2026, Gust Kepler, the former CEO of Blackbox converted 550,000 shares of Series A Convertible Preferred Stock into 550,000 shares of common stock in accordance with the related Certificate of Designations.
On May 5, 2026, pursuant to the 2025 Option Exercise Agreement with Gust Kepler, the sole director and President of Blackbox.io, Inc. ("Blackbox.io"), the Nevada corporation that operates the historic Blackbox fintech business. Pursuant to that agreement, Mr. Kepler transferred to us 1,084,999 shares of our Series A Convertible Preferred Stock and we transferred to Mr. Kepler 3,269,998 shares of Series A Preferred Stock of Blackbox.io, representing all such shares we held.
Each share of Blackbox.io Series A Preferred Stock carries 100 votes per share and votes with the common stock as a single class. Following the transfer, Mr. Kepler holds a majority of Blackbox.io's voting power, and we no longer have the ability to elect or remove directors or otherwise direct the activities most significant to Blackbox.io's economic performance. We retain our common stock equity interest in Blackbox.io, which represents a non-controlling minority voting interest.
As of May 2026, following the Option Exercise, Blackbox.io ceased to be a subsidiary. Blackbox.io is not material to our consolidated results, financial position or cash flows; the financial effect of the deconsolidation will be reflected in our financial statements for the three and six months ending June 30, 2026.
Separately, on the same day Mr. Kepler sold 1,634,999 shares of our Series A Convertible Preferred Stock to Leonard Sternheim for aggregate consideration of $1.00, pursuant to a previously disclosed February 24, 2026 stock purchase agreement contingent on closing of the Merger. We were not a party to, and received no proceeds from, that transaction. As a result of these transactions, voting control of the Company is now substantially concentrated in our Chief Executive Officer and director, Leonard Sternheim. Following the Company's reacquisition and cancellation of 1,084,999 shares of our Series A Convertible Preferred Stock from Mr. Kepler. Mr. Sternheim beneficially owns all of the shares of our Series A Convertible Preferred Stock that remain outstanding. Each share of our Series A Convertible Preferred Stock carries 100 votes per share and votes together with our Common Stock as a single class on all matters submitted to a vote of stockholders. Without considering the shares of our Common Stock that Mr. Sternheim directly or indirectly holds, Mr. Sternheim now controls a substantial majority of the aggregate voting power of our outstanding capital stock. As a consequence, the Company now meets the definition of a "controlled company" within the meaning of Nasdaq Listing Rule 5615(c). The Company does not currently intend to rely on the corporate governance exemptions available to controlled companies under Nasdaq Listing Rule 5615(c)(2), and will continue to maintain a majority-independent Board of Directors and fully independent Audit, Compensation, and Nominating and Corporate Governance Committees. The concentration of voting power described above, the potential for transactions in which Mr. Sternheim has an interest that differs from that of our other stockholders, and the limited ability of our public stockholders to influence matters submitted to a vote could materially and adversely affect the trading price of our Common Stock and are described in greater detail in Part II, Item 1A of this Quarterly Report on Form 10-Q.
Key Factors and Trends Affecting Our Business
We believe the following factors will significantly affect our future results, financial condition and cash flows. The discussion reflects management's current expectations and is subject to the matters described under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements."
Demand for Rare Earth Materials and Magnets
Magnet rare earths-neodymium, praseodymium, dysprosium, terbium and samarium-are critical inputs for NdFeB and samarium-cobalt magnets used across defense, aerospace, electric and hybrid vehicles, robotics, industrial automation, wind, medical devices and consumer electronics. We expect medium- and long-term demand to grow with electrification, the energy transition, the proliferation of "physical AI" applications and increasing focus on industrial and defense supply chain security.
During 2025 and into 2026, China expanded export controls and licensing requirements on rare earths, rare earth magnets and downstream products, including products containing even trace amounts of Chinese-origin material. The November 2025 U.S.-China trade and economic understanding suspended certain expanded controls and retaliatory measures, but heightened market focus on rare earth supply chain volatility, potential magnet rare earth shortages, price volatility and the strategic value of non-Chinese supply continues. As an integrated North American producer that spans upstream resources and downstream metallization and magnet materials, we believe we are well positioned to benefit from these trends, particularly as U.S. policy, procurement and customer qualification frameworks continue to favor domestic, traceable supply.
U.S. and Allied Policy and Procurement
U.S. initiatives under the Defense Production Act, the Inflation Reduction Act, the Department of Defense Industrial Base Analysis and Sustainment program and related procurement and grant programs continue to support the domestic critical minerals supply chain. The Euclid Facility currently supplies government and government-affiliated customers, and we are actively pursuing additional government, defense and dual-use customer relationships and funding opportunities. Changes in administration priorities, appropriations, tariff and trade policy, or program scope could materially affect demand, realized prices and the availability of government funding for our capital projects.
Advancement of the SRC Strategic Processing and Metallization Arrangements
We are continuing to advance our strategy to develop rare earth separation, processing, and metallization capabilities in North America. A key element of this strategy is our relationship with SRC, under which we entered into arrangements in November 2025 to support pilot-scale process development and the planned development of a commercial-scale metallization facility.
The SRC arrangements are expected to affect our business, liquidity, capital allocation, operating results, and development timeline. During the three months ended March 31, 2026, we paid aggregate deposits of $2.4 million to SRC, consisting of $1.4 million under the Pilot Agreement and $1.0 million under the EPF Agreement. As of March 31, 2026, we had not received equipment, goods, or services related to these deposits. Accordingly, the deposits were recorded as prepaid or other assets rather than expense, construction in progress, or property and equipment.
The Pilot process project is intended to support pilot-scale process development and validation activities. The anticipated pilot process and related pilot equipment are expected to provide technical information necessary to determine processing specifications, equipment configuration, operating parameters, and other requirements for the planned commercial-scale metallization facility. The results, timing, and cost of the pilot program may affect the scope, timing, and cost of the commercial-scale facility and our related capital requirements.
Future expenditures related to the planned commercial-scale metallization facility may be significant and may vary based on the pilot results, engineering requirements, equipment procurement, permitting and safety requirements, commissioning requirements, availability of financing, and our approval of future work programs. We expect that these arrangements will continue to be an important factor affecting our liquidity and capital resources as we advance our processing and metallization strategy.
Ramp-Up and Expansion of the Euclid Facility
Near-term revenue is generated primarily at the Euclid Facility under short-term service and supply contracts for rare earth metals, alloys and magnet materials. From acquisition on March 31, 2025 through December 31, 2025, the Euclid Facility generated $0.8 million of revenue and $0.9 million of related cost of sales. Growth in revenue and operating margin will depend on customer and product qualification, capital investment in equipment upgrades, automation and capacity expansion, feedstock supply (including under our SRC arrangement), workforce and continued compliance with the requirements applicable to U.S. government and defense customers. We continue to evaluate further investment in metallization, alloy and magnet materials capacity, which we expect to require additional capital expenditures.
Advancement of the Hoidas Lake Project
The Hoidas Lake Project remains an exploration-stage property. As of March 31, 2026, we had capitalized $50.5 million in related mining property rights, with no amortization recorded as production has not commenced; mineral exploration costs are expensed as incurred. Advancing the project toward S-K 1300 mineral resources and reserves will require substantial multi-year expenditures, including drilling and metallurgical testing, environmental and engineering studies, indigenous and community engagement, permitting and pre-feasibility and feasibility studies. The timing, scope and outcome of these activities-and the ultimate development decision-will materially affect our long-term financial profile and capital needs.
The Hoidas Lake dispositions require annual exploration expenditures of CDN$15 per hectare in each of years two through ten following staking, and CDN$25 per hectare thereafter. The property is also subject to a 1.8% net smelter return royalty, capped at an aggregate CDN$1.0 million payable quarterly from gross revenue once commercial production is reached.
Public Company and Regulatory Costs
As a Nasdaq-listed reporting company, we expect to incur substantial incremental costs for SEC reporting, Sarbanes-Oxley compliance, internal control over financial reporting, investor relations, D&O insurance, board fees and external audit, legal and other professional services. Our operations are also subject to U.S. and Canadian laws and regulations governing mining, environmental protection, occupational health and safety, export controls (including
defense-related materials and technology) and anti-corruption. Compliance is integral to our cost base; changes in these laws and regulations could materially affect our business.
Results of Operations
Basis of Comparison
The period-over-period changes presented in the table below are affected by significant changes in the composition of the Company's consolidated reporting entity between the comparative periods, and are not, in management's view, representative of the underlying operating trends of the post-Merger business. In particular:
The three months ended March 31, 2025 reflect the operations of pre-merger REalloys Inc. (the accounting acquirer) only, prior to the March 31, 2025 acquisition of PMT Critical Metals Inc. ("PMTCM") and prior to the February 24, 2026 reverse recapitalization with Blackbox As a result, the comparative period includes no revenue, no PMTCM operating expenses, and no Blackbox subscription revenue, cost of revenues or operating expenses.
The three months ended March 31, 2026 reflect (i) a full quarter of PMTCM operations (acquired on March 31, 2025, the final day of the comparative quarter), (ii) 33 days of consolidated Blackbox operations (February 25 through March 31, 2026), and (iii) significant non-recurring charges recognized in connection with the closing of the Merger, including $32.9 million of stock-based compensation expense related to awards granted in connection with the formation of the post-Merger board of directors, a $6.4 million impairment of the EVTEC Holdings Group Limited investment acquired in the Merger, and $9.2 million accretion expense on the Series C Convertible Preferred Stock recognized upon its conversion to common stock.
Accordingly, the period-over-period percentage changes shown in the table below - including the 9,750% increase in general and administrative expense and the 10,092% increase in total operating expenses - principally reflect the change in the composition of the reporting entity and the Merger-related non-cash charges, rather than period-over-period changes in the underlying operations of any business included in both periods. Readers should consider these comparability limitations when evaluating the discussion that follows.
The Company is in the development stage and has not generated significant revenue during the periods presented. For the three months ended March 31, 2026, operating results were driven primarily by general and administrative expenses, including non-cash stock-based compensation recognized in connection with the February 24, 2026 reverse recapitalization, director and officer RSU awards, and shares-for-services consulting agreements, together with costs associated with operating as a newly public company.
Compared with the prior-year period, operating expenses increased materially as a result of costs associated with the reverse recapitalization transaction, SEC reporting and compliance requirements, audit readiness, legal and technical accounting support, and additional administrative infrastructure required to support the Company's growth strategy and public-company obligations. The Company also expects continuing expenditures associated with the development of its business plan, including advancement of its mineral property strategy, downstream processing capabilities, and supply chain relationships. As a result, the Company expects to continue to incur net losses for the foreseeable future.
Three Months Ended March 31, 2026 vs. Three Months Ended March 31, 2025
March 31, 2026 March 31, 2025 $ Change % Change
(Unaudited)
Net Revenues
$ 706 $ - $ 706
Operating expenses:
Cost of sales 299 - 299
Software and development costs 34 - 34
General and administrative 85,402 867 84,535 9,750 %
Advertising and marketing 2,541 - 2,541
Depreciation and amortization 87 - 87
Total operating expenses 88,363 867 87,496 10,092 %
Loss from operations (87,657) (867) (86,790) 10,010 %
Other expense
19,061 875 18,186 2,078 %
Net loss (106,718) (1,742) (104,976) 6,026 %
Revenue
Revenue for the three months ended March 31, 2026 was $706, compared to $0 for the three months ended March 31, 2025. The Q1 2026 revenue reflects PMTCM's sales of rare earth metals and magnet materials at the Euclid Magnet Facility, principally under contracts with the Defense Logistics Agency (DLA contract awarded March 2, 2026) and the U.S. Department of Energy's AMES National Laboratory, together with subscription revenue from the Blackbox trading analytics platform for the 33-day period from February 25 through March 31, 2026. Q1 2025 revenue was $0 because the PMTCM acquisition closed on March 31, 2025 (the final day of that quarter) and Blackbox was not yet included in our results.
Cost of Revenues and Gross Margin
Cost of revenues for the three months ended March 31, 2026 was $299 compared to $0 for the three months ended March 31, 2025. Cost of revenues consists primarily of outsourced direct costs allocated from Powdermet, Inc. under the PMTCM Uses & Services Agreement, representing materials and direct labor costs at the Euclid Magnet Facility, together with Blackbox cost of revenues (merchant fees, data feeds, and technology costs) for the post-merger period. Gross profit for the three months ended March 31, 2026 was $407, representing a gross margin of 58%. There was no comparable gross margin for Q1 2025 as the Company had no revenue in that period.
Software Development Costs
Software development costs for the three months ended March 31, 2026 were $34, compared to $0 for the three months ended March 31, 2025. These costs relate to the Blackbox trading analytics platform and were not present in the prior-year period as Blackbox was not consolidated until the February 24, 2026 reverse recapitalization.
General and Administrative
General and Administrative expenses for Q1 2026 was $85.4 million, compared to $0.9 million for Q1 2025. The increase was driven primarily by $81.8 million of stock-based compensation. Stock based compensation expense included $32.9 million on the vesting of RSUs granted to the members of the Board of Directors of the Company who joined at the closing of the Merger and stock-based compensation expense of $48.9 million related to executive and shares-for-services consulting awards granted in 2025. Excluding non-cash items, SGA was approximately $3.6 million, of professional fees, legal, audit, and other general and administrative expenses. Management expects to incur significant costs throughout fiscal 2026 related to public company governance, advancement of the Company's Information Technology capabilities and other costs associated with our recent public listing.
Advertising and Marketing
Advertising and marketing expenses for the three months ended March 31, 2026 were $2.5 million, compared to $0 for the three months ended March 31, 2025. These expenses reflect communications and marketing agreements entered following the reverse recapitalization, including costs associated with increasing retail investor awareness of the Company
following its Nasdaq listing on February 25, 2026. The Company does not expect advertising and marketing expenses to continue at this level in future periods.
Depreciation and Amortization
Depreciation and amortization for the three months ended March 31, 2026 was $87, compared to $0 for the three months ended March 31, 2025. The expense relates to fixed assets at the Euclid Magnet Facility, intangible assets acquired in connection with the PMTCM acquisition, and fixed assets of Blackbox consolidated from the February 24, 2026 merger date, none of which were reflected in Q1 2025.
Other Income (Expense), Net
Other income (expense), net for the three months ended March 31, 2026 was net expense of $19.1 million, compared with net expense of $0.9 million for the three months ended March 31, 2025. The components of the period-over-period change are summarized below (in thousands):
March 31, 2026 March 31, 2025 $ Change % Change
Impairment of EVTEC investment $ (6,394) $ - $ (6,394)
Change in fair value of contingent consideration (3,439) (784) (2,655) 339%
Accretion expense - Series C Convertible Preferred Stock (9,228) - (9,228)
Interest income, interest expense and other, net - (90) 90 (100)%
Other income (expense), net $ (19,061) $ (874) $ (18,187) 2081%
The Q1 2026 components are described below.
•Impairment of EVTEC investment. We recognized a $6.4 million impairment of the EVTEC Holdings Group Limited equity investment on the February 24, 2026 Merger date. The investment was recorded at its historical carrying value of $8.4 million on acquisition and written down to an estimated fair value of $2.0 million under the measurement alternative for equity securities without a readily determinable fair value under ASC 321, reflecting observable indicators including the failure of two contemplated public-market transaction pathways, operational disruption from a cyber-attack on EVTEC's primary customer, reduced FY2026 revenue guidance, and concentrated customer exposure.
•Change in fair value of contingent consideration. We recognized a $3.4 million loss on the remeasurement of the acquisition-related contingent consideration (the Special Warrant entitled to automatic conversion into $38.0 million of common stock upon a qualifying go-public transaction) immediately prior to its conversion to equity on the February 24, 2026 closing date. The Level 3 fair value of the contingent consideration was adjusted from a carrying value of $34.6 million to its $38.0 million conversion value, with the corresponding equity issuance reclassified to additional paid-in capital.
•Accretion expense - Series C Convertible Preferred Stock. We recognized $9.2 million of accretion expense in connection with the conversion of our Series C Convertible Preferred Stock to common stock. The Series C Convertible Preferred Stock had been recorded at an initial carrying value below its stated conversion value, and the remaining accretion to conversion value was recognized in earnings upon conversion.
The Q1 2025 amount consisted primarily of a $0.9 million change in fair value of contingent consideration related to the pre-merger Special Warrant.
Net Loss
Net loss for the three months ended March 31, 2026 was ($106.7 million), compared to ($1.7 million) for the three months ended March 31, 2025. The significant increase in net loss was driven primarily by $81.8 million in stock-based compensation recognized in the quarter in connection awards granted on the appointment of certain new directors following the Merger, recognition of stock-based awards and shares-for-services consulting agreements granted in previous periods, as well as the $6.4 million EVTEC investment impairment and the $3,4 million change in fair value of Special Warrants.
Liquidity and Capital Resources
As of March 31, 2026, the Company had cash of $42.5 million, and as of the financial statement issuance date of May 20, 2026, the Company had approximately $34.3 million of unrestricted cash. The Company's historical sources of liquidity have consisted primarily of equity financings and sale of common shares. The Company's principal liquidity requirements are expected to consist of funding operating losses, professional fees, public-company compliance costs, maintenance of mineral properties, and development of the Company's rare earth processing and metallization project.
Key Liquidity Metrics March 31, 2026 ($) December 31, 2025 ($)
Cash and cash equivalents $ 42,548 $ 2,824
Working capital (current assets minus current liabilities) 58,925 31,387
Accumulated deficit (187,843) (81,125)
Total stockholders' equity 101,568 35,834
The following table summarizes our cash flows (in thousands):
Three months ended
March 31, 2026 March 31, 2025 $ Change % Change
Net cash used in:
Operating activities
$ (10,550) $ (352) $ (10,198) 2897 %
Investing activities
396 - 396
Financing activities
57,378 841 56,537 6723 %
Net change in cash and cash equivalents $ 47,224 $ 490 $ 46,734 9538 %
Operating Activities
Cash used in operating activities of $10.6 million for Q1 2026 reflects approximately $4.5 million of cash general and administrative expenses, $2.4 million of SRC deposits, and $2.5 million of advertising and marketing costs. The $106.7 million net loss is reconciled to operating cash use principally by non-cash items recognized in connection with the Merger: $81.8 million of stock-based compensation, the $6.4 million EVTEC impairment, $9.2 million of accretion expense on the Series C Convertible Preferred Stock recognized on conversion, and $3.4 million of change in fair value of contingent consideration prior to their conversion to common stock.
The Q1 2025 amount reflects pre-merger REalloys operations only and is not representative of the post-Merger consolidated business.
Investing Activities
Cash provided by investing activities of $0.4 million for Q1 2026 represents cash acquired in the reverse recapitalization, less de minimis fixed-asset purchases. We had no comparable investing activity in Q1 2025. We expect investing cash use to increase in future periods as we advance our SRC Arrangements.
Financing Activities
Cash provided by financing activities of $57.4 million for Q1 2026 consisted principally of approximately $46.8 million of net proceeds from the March 9, 2026 underwritten public offering, $7.5 million of prospective-investor share-subscription deposits (returned in April 2026), and $2.6 million of net cash from the second tranche of the Series X Preferred Stock financing at the Merger's closing. The Q1 2025 amount of $1.3 million reflects an initial Series X Preferred Stock tranche.
Cash increased from $2.8 million at December 31, 2025 to $42.55 million at March 31, 2026. The increase reflects the March 9, 2026 public offering of approximately $46.8 million and the receipt of the second tranche of the Series X Preferred shares ($2.6 million, net) on the Merger's close, We are using the net proceeds for working capital and general corporate purposes, including ongoing operations at our Euclid facility, discretionary expenditures under our rare-earth processing and metallization arrangements, and public-company operating costs. The offering, together with our existing cash, is the principal reason that cash and cash equivalents increased.and underlies our reassessment under ASC 205 that substantial doubt about our ability to continue as a going concern no longer exists. See Going Concern Reassessment above and Note 8 - Stockholders' Equity.
Increases were partially offset by operating cash outflows, current deposits made related to the rare earth processing and metallization project, and retirement of certain related party debts.
Known material cash commitments include non-binding SRC capital commitments of approximately $71.3 million over 2025-2028. Management views these expenditures as discretionary and capable of being sequenced or financed through separate project-level or capital markets activity. The Company expects that additional capital may be required for longer-term growth initiatives.
The Company is actively evaluating a range of potential financing alternatives, including equity, equity-linked and debt instruments, as well as strategic and government-linked funding arrangements, to support its development pipeline and capital projects. While current cash resources are expected to be sufficient to fund baseline operating needs and obligations for at least the next twelve months, Management expects that additional capital will be required to execute the Company's near-term development and expansion plans on the desired timetable and scale. As part of its broader capital strategy, the Company may adjust the timing, scope or sequencing of certain discretionary or project-related expenditures, including deferring or phasing elements of its development program, if necessary, based on the availability and cost of external funding. Accordingly, the Company anticipates pursuing one or more additional funding transactions, the timing, structure and amount of which will depend on market conditions, project prioritization and other factors, and there can be no assurance that such financing will be available on acceptable terms, or at all.
Known Trends and Uncertainties
The Company's future operating results are subject to a number of known trends and uncertainties. These include the need to obtain additional financing, the timing of development activities relating to mineral properties and operational infrastructure, dependence on successful execution of supply chain and expansion initiatives, and the increased costs and administrative burden associated with operating as a newly public company.
In addition, the Company's future performance may be affected by the volatility of rare earth materials markets, the timing of customer demand in protected U.S. markets, regulatory and permitting developments, and the Company's ability to attract and retain qualified personnel and advisors necessary to support its operations and reporting functions. Against this backdrop, capital availability is the Company's most immediate planning constraint.
•The Company requires additional capital to fund longer-term operations, develop the Hoidas Lake mineral property, and build downstream processing capacity. The Company estimates non-binding SRC capital commitments of approximately $71.3 million over 2025-2028.
•Effective January 1, 2027, the U.S. Department of Defense will prohibit procurement of covered permanent magnets containing rare earths from adversarial nations (NDAA FY2023 §857). This regulatory development is expected to create demand for the Company's North American supply chain; however, qualifying as a compliant supplier and executing defense contracts ahead of the effective date is subject to uncertainty.
•Heavy rare earth prices (dysprosium, terbium) increased materially in early 2026. The Company does not currently hedge commodity price exposure.
•The Company's PMTCM revenue depends on contracts with U.S. government agencies; the DLA contract was awarded March 2, 2026. Any disruption to or failure to renew these contracts could adversely affect revenue.
•As a newly public company, the Company is incurring significant additional costs for SEC compliance, investor relations, and internal controls development.
Going Concern
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the ordinary course of business. In the Company's previously issued interim financial statements for the period ended September 30, 2025, management concluded that substantial doubt existed about the Company's ability to continue as a going concern due to limited liquidity, negative operating cash flows and the early stage of the Company's operations.
In connection with the preparation of these consolidated financial statements, management reevaluated the Company's ability to continue as a going concern in accordance with ASC 205-40.
In performing this assessment, management considered obligations probable of becoming due within the applicable assessment period and distinguished those obligations from larger strategic and development expenditures that are discretionary, non-binding, capable of being sequenced or expected to be financed separately. Management's improved liquidity position reflects the successful execution of financing plans contemplated in prior periods, including the closing of the Company's March 9, 2026, public offering, Based on the Company's improved liquidity, management concluded that the conditions and events that raised substantial doubt in the prior period do not raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the consolidated financial statements are issued.
The Company expects that additional capital may be required in the future to support longer-term strategic growth initiatives and major development projects. However, management's going concern conclusion does not depend on the completion of any specific future financing transaction during the applicable one-year assessment period.
Critical Accounting Estimates
A complete discussion of our critical accounting estimates is included in our the Company's Current Report on Form 8-K/A filed on May 12, 2026, and in Blackbox's Annual Report on Form 10-K for the year ended December 31, 2025. Other than those listed below, there have been no significant changes in our critical accounting estimates during the three months ended March 31, 2026.
Reverse Recapitalization
The accounting for the February 24, 2026 reverse recapitalization required significant management judgment and estimation as it pertains to the fair value of certain assets acquired. Second, the EVTEC Holdings Group Limited investment acquired in the recapitalization was written down to an estimated fair value of approximately $2.0 million at the merger date, from a carrying value of $8.4 million, using unobservable inputs including assessments of EVTEC's operational disruption, customer concentration, and failed public-market transaction pathways. This Level 3 fair value measurement is inherently uncertain and actual results may differ materially.
Off-Balance Sheet Arrangements
As of March 31, 2026, the Company did not have any off-balance sheet arrangements.
REalloys Inc. published this content on May 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 20, 2026 at 21:18 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]