10-Q: Quarterly report [Sections 13 or 15(d)]
Published on
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 10, 2026, the registrant had
Table of Contents
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PART I. |
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Item 1. |
2 |
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2 |
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3 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
4 |
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Condensed Consolidated Statements of Changes In Members' Deficit and Stockholders' Equity |
5 |
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6 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
7 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
Item 3. |
29 |
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Item 4. |
29 |
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PART II. |
30 |
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Item 1. |
30 |
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Item 2. |
30 |
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Item 3. |
31 |
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Item 4. |
31 |
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Item 5. |
31 |
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Item 6. |
33 |
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34 |
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i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance, as well as our plans, objectives and expectations for our business operations and financial performance and condition. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. In addition, statements that “we believe” or similar statements reflect our beliefs and opinions on the relevant subject. These forward-looking statements include, but are not limited to, statements about:
We have based these forward-looking statements largely on our current expectations, estimates, forecasts, and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
1
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
RARE EARTHS AMERICAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. Dollars, except share data) (unaudited)
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June 30, |
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December 31, |
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2026 |
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2025 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Non-current assets |
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Property and equipment, net |
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Mineral interests (includes $ |
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Deferred offering costs |
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Other non-current assets |
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Total non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES |
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Current liabilities |
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Accounts payable (includes $ |
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$ |
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$ |
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Accrued expenses (includes $ |
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Convertible related party loan |
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(includes $ |
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Total current liabilities |
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Non-current liabilities |
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SAFE liability |
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Warrant liability |
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(includes $ |
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Total non-current liabilities |
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Total liabilities |
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STOCKHOLDERS' EQUITY |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Equity attributable to stockholders of the Company |
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Noncontrolling interest |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
2
RARE EARTHS AMERICAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. Dollars, except share and per share data) (unaudited)
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For the Three Months Ended June 30, |
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For the Six Months Ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Operating expenses: |
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Exploration and evaluation expenses |
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$ |
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$ |
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$ |
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$ |
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General and administrative expenses |
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Depreciation expense |
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Transaction costs |
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Total operating expenses |
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Operating loss |
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( |
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Other income (expenses): |
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Interest income |
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Interest expense |
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( |
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( |
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( |
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( |
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Foreign currency transaction gain/(loss) |
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( |
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Change in fair value of SAFE |
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( |
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( |
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Change in fair value of warrants |
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( |
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Total other (expenses) income |
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( |
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( |
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( |
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( |
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Loss before income taxes |
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( |
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( |
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( |
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Provision for income taxes |
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Net loss |
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( |
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( |
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( |
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Less: Net loss attributable to noncontrolling interest |
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Net loss attributable to Rare Earths Americas, Inc. |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per common share, basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average common shares outstanding, basic and diluted |
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See accompanying notes to the condensed consolidated financial statements.
3
RARE EARTHS AMERICAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands of U.S. Dollars) (unaudited)
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For the Three Months Ended June 30, |
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For the Six Months Ended June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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Net loss |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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( |
) |
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( |
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( |
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( |
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Total other comprehensive income (loss) |
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( |
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( |
) |
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( |
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( |
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Comprehensive loss |
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( |
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( |
) |
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( |
) |
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( |
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Less: Comprehensive loss attributable to noncontrolling interest |
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— |
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— |
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— |
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— |
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Comprehensive loss attributable to Rare Earths Americas, Inc. |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
See accompanying notes to the condensed consolidated financial statements.
4
RARE EARTHS AMERICAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' DEFICIT AND STOCKHOLDERS' EQUITY
(in thousands of U.S. Dollars, except share data) (unaudited)
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Members' Equity |
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Accumulated |
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Accumulated |
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Total |
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Balance as of December 31, 2024 |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Equity contribution from parent |
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— |
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— |
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Change in foreign currency translation |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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( |
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( |
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Balance as of March 31, 2025 |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Equity contribution from parent |
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— |
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— |
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Change in foreign currency translation |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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( |
) |
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( |
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Balance as of June 30, 2025 |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Common Stock |
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Additional Paid in Capital |
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Accumulated |
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Accumulated |
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Noncontrolling Interest |
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Total |
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Shares |
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Amount |
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Balance as of December 31, 2025 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Change in foreign currency translation |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance as of March 31, 2026 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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$ |
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Initial public offering, net of underwriting discounts and commissions of ($ |
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— |
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— |
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— |
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Conversion of SAFE into common stock |
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— |
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— |
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— |
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— |
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Conversion of related party convertible loan into common stock |
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— |
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— |
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— |
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— |
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Issuance of common stock in connection with the Greenfield Agreement |
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— |
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— |
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— |
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— |
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Exercise of warrants and reclassification of warrant liability |
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— |
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— |
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— |
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— |
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Vesting and settlement of restricted stock units |
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— |
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— |
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— |
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— |
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Shares withheld to satisfy tax withholding obligations |
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( |
) |
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— |
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( |
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— |
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— |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Change in foreign currency translation |
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— |
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— |
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— |
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( |
) |
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— |
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— |
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( |
) |
Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance as of June 30, 2026 |
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$ |
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$ |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
5
RARE EARTHS AMERICAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of U.S. Dollars) (unaudited)
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For the Six Months Ended June 30, |
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2026 |
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2025 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
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Depreciation expense |
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Loss on foreign currency transaction |
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Stock-based compensation expense |
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Provision for labor claims |
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Allocated expenses from parent |
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Change in fair value of warrants |
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Change in fair value of SAFE |
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Exploration option purchased with shares |
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Noncash interest expense |
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Changes in operating assets and liabilities: |
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Prepaid expenses |
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( |
) |
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( |
) |
Other assets |
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( |
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Accounts payable |
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( |
) |
|
Accrued expenses |
|
|
( |
) |
|
|
|
|
Accounts payable to related parties |
|
|
|
|
|
|
||
Other liabilities |
|
|
|
|
|
( |
) |
|
Net cash (used in) provided by operating activities |
|
$ |
( |
) |
|
$ |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of short-term investments |
|
|
( |
) |
|
|
|
|
Proceeds from sales of short-term investments |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Investment in mineral interests |
|
|
( |
) |
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from initial public offering, net of underwriting discounts and commissions ($ |
|
|
|
|
|
|
||
Payments for taxes related to net share settlement of equity awards |
|
|
( |
) |
|
|
|
|
Payments of deferred offering costs |
|
|
( |
) |
|
|
( |
) |
Warrant exercises |
|
|
|
|
|
|
||
SAFE proceeds |
|
|
|
|
|
|
||
Net cash provided by (used in) financing activities |
|
|
|
|
|
( |
) |
|
Effect of exchange rates on cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Net decrease in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental non-cash information: |
|
|
|
|
|
|
||
Non-cash contribution from REA Australia |
|
$ |
|
|
$ |
|
||
Unpaid deferred offering costs |
|
$ |
|
|
$ |
|
||
SAFE Liability conversion to common stock |
|
$ |
|
|
$ |
|
||
Related party note conversion to common stock |
|
$ |
|
|
$ |
|
||
Lease liabilities arising from obtaining right-of-use assets |
|
$ |
|
|
$ |
|
||
See accompanying notes to the condensed consolidated financial statements.
6
RARE EARTHS AMERICAS, INC.
Notes to the CONDENSED CONSOLIDATED financial statements
(in thousands of U.S. Dollars, except share and per share data) (unaudited)
Rare Earths Americas, Inc. (“REA”, the “Company”, “we”, or “our”) was initially incorporated in February 2025 under the laws of the Cayman Islands as Rare Earths Americas Ltd. On October 15, 2025, the Company completed a redomestication, through the filing of a certificate of conversion in the state of Texas, resulting in the Company becoming a Texas corporation and the Company's name changed to Rare Earths Americas, Inc.
The Company is an exploration-stage mining company engaged in the acquisition, exploration, and development of mineral resource projects in the United States and Brazil. The Company's principal activities consist of advancing rare earth and mineral resource projects and evaluating related development opportunities. The Company has not generated revenues from mining operations.
The Company operates in
Initial Public Offering
The Company completed its initial public offering (the “Offering”) of
In connection with the Offering, all outstanding Simple Agreements for Future Equity ("SAFE") automatically converted into
In connection with the Offering, the Company recognized $
Prior to the Offering, deferred offering costs, which consisted of accounting, legal and other fees directly associated with the Offering, were capitalized on the consolidated balance sheets. In connection with the Offering, $
Summary of Significant Accounting Policies
Other than short-term investments below, there have been no material changes to our significant accounting policies, as disclosed in Note 2 – “Summary of Significant Accounting Policies,” to the audited consolidated financial statements for the fiscal year ended December 31, 2025 included in our final prospectus filed pursuant to Rule 424(b)(4) on May 7, 2026 (File No. 333-295032) (the "Prospectus").
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements of Rare Earths Americas, Inc., its wholly-owned subsidiaries and consolidated variable interest entities, have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the United States Securities & Exchange Commission (“SEC”) for interim financial reporting. All intercompany balances and transactions have been eliminated in consolidation.
All dollar amounts presented in the accompanying footnotes are presented in thousands, with the exception of share and per share information.
7
Interim Financial Statement Presentation
Short-Term Investments
Investments in equity securities are accounted for in accordance with ASC 321, Investments-Equity Securities. Equity securities with a readily determinable fair value are measured at fair value with changes in fair value recognized in earnings. For equity securities without a readily determinable fair value, the Company elects the measurement alternative, under which investments are recorded at cost, less impairment, and adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer.
The Company evaluates such investments each reporting period to determine whether impairment indicators are present. If an investment is determined to be impaired, the carrying amount is written down to its fair value, and the resulting loss is recognized in earnings.
The Company's short-term investments consist of exchange-traded funds, which are Level 1 investments valued at the closing price or last trade reported on the major market on which the individual securities are traded. Realized and unrealized gains and losses are included in interest income in the accompanying condensed consolidated statements of operations. Refer to Note 3 — Fair Value Measurements for additional information. Unrealized gains on equity securities still held at June 30, 2026 were not material for the three and six months ended June 30, 2026.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet dates and (2) the reported amounts of expenses during the reporting periods.
Significant accounting estimates reflected in our condensed consolidated financial statements include, but are not limited to, fair value of warrant liability, and fair value of stock-based compensation awards granted prior to the initial public offering (the "IPO").
Net Loss per Common Share
Basic and diluted loss per share of common stock attributable to common stockholders have been retroactively adjusted to reflect the capital structure of REA for all periods presented and were calculated by dividing net loss attributable to common stockholders by the weighted-average shares of common stock outstanding for the period.
When applicable, diluted earnings per share would be calculated based upon the inclusion of additional dilutive and potentially dilutive shares that are determined not to be anti-dilutive.
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
SAFE |
|
|
|
|
|
||
Warrants |
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
||
Convertible related party loan |
|
|
|
|
|
||
Total |
|
|
|
|
|
||
Recently Adopted Accounting Standards
For the three and six months ended June 30, 2026, there were no newly adopted accounting standards that materially impacted the Company’s condensed consolidated financial statements. Refer to Note 2 – “Significant Accounting Policies,” in the audited consolidated financial statements for the fiscal year ended December 31, 2025, in the Company’s Prospectus.
8
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures” (“ASU 2024-03”). ASU 2024-03 amends ASC Topic 220, “Comprehensive Income,” to expand the disclosure of expense information in the notes to the financial statements. ASU 2024-03 requires public business entities to disaggregate specified income statement expenses, such as purchases of inventory, employee compensation, depreciation, amortization, and depletion into detailed categories presented in a tabular format. Additionally, ASU 2024-03 mandates (1) qualitative descriptions for expenses not separately disaggregated and (2) disclosure of the total amount of selling expenses including, in annual periods, disclosure of an entity's definition of selling expenses. ASU 2024-03 is effective for the Company’s fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027, and may be applied prospectively or retrospectively. Early adoption is also permitted. The Company is currently evaluating the effect of adopting ASU 2024-03 on its disclosures.
At times, the Company may hold (1) assets and liabilities that qualify as financial instruments under ASC 820, “Fair Value Measurement” (“ASC 820”) that are re-measured and reported at fair value at each reporting period, and (2) non-financial assets and liabilities that are re-measured and reported at fair value on a non-recurring basis.
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or liability.
The Company applies a three-level hierarchy to prioritize the inputs used in measuring fair value:
• Level 1: |
Quoted prices in active markets for identical assets or liabilities. |
• Level 2: |
Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets in active markets or inputs that are observable for the asset or liability. |
• Level 3: |
Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use. |
As of June 30, 2026 and December 31, 2025, the Company's financial instruments consisted of cash and cash equivalents, short-term investments, accounts payable, warrants, the Simple Agreements for Future Equity (“SAFE”) liability and related party debt. The carrying amount of cash and cash equivalents, excluding money market funds measured at fair value, and accounts payable approximates fair value due to the short-term nature of these instruments. The carrying amount of the short-term investments, money market funds, warrants and SAFE liability is fair value, as further described below.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents the financial instruments measured at fair value on a recurring basis:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Level 1 Financial assets: |
|
|
|
|
|
|
||
Equity securities (included as Short-term investments) |
|
$ |
|
|
$ |
|
||
Money market funds (included in Cash and cash equivalents) |
|
|
|
|
|
|
||
Level 2: |
|
|
— |
|
|
|
— |
|
Level 3 Financial liabilities: |
|
|
|
|
|
|
||
Warrant liability |
|
|
|
|
|
|
||
SAFE liability |
|
|
|
|
|
|
||
Stock-based compensation warrant liability (included in Other non-current liabilities) |
|
|
|
|
|
|
||
9
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
There were
Warrant Liability
On July 22, 2025, the Company issued immediately exercisable and fully vested warrants to purchase shares of its common stock as part of the Foothills transaction. The warrants are freestanding financial instruments and do not meet the criteria for equity classification because the exercise price is denominated in a currency other than the Company's functional currency. As a result, the warrants are not considered indexed to the Company's own stock and are classified as a warrant liability.
The Company estimates the fair value of the warrant liability using the Black-Scholes option-pricing model. The significant unobservable inputs used in the fair value measurement of the warrant liability are the fair value of the underlying stock at the valuation date and the estimated term of the warrants. The warrant liability is categorized as Level 3 because it is valued based on unobservable inputs and management's judgment due to the absence of quoted market prices, inherent lack of liquidity, and the long-term nature of such financial instruments.
The following table summarizes the assumptions used in the Black-Scholes option-pricing model to estimate the fair value of the warrant liability:
|
|
June 30, 2026 |
|
December 31, 2025 |
Expected term (in years) |
|
|
||
Expected volatility |
|
|
||
Risk-free interest rate |
|
|
||
Expected dividend yield |
|
|
||
Share price |
|
$ |
|
$ |
Changes to the expected term, expected volatility, or the price of the underlying stock could result in a change to the fair value measurement.
During the three and six months ended June 30, 2026, certain warrant holders exercised
The following table presents the reconciliation of the warrant liability accounted for under ASC 815 measured at fair value on a recurring basis:
Beginning balance – December 31, 2025 |
|
$ |
|
|
Change in estimated fair value |
|
|
|
|
Warrants exercised |
|
|
( |
) |
Ending balance – June 30, 2026 |
|
$ |
|
The following table presents the reconciliation of the stock compensation warrant liability accounted for under ASC 718 measured at fair value on a recurring basis:
Beginning balance – December 31, 2025 |
|
$ |
|
|
Change in estimated fair value |
|
|
|
|
Warrants exercised |
|
|
|
|
Ending balance – June 30, 2026 |
|
$ |
|
SAFE Liability
In December 2025, the Company entered into SAFE agreements to raise $
The fair value of the Company's SAFE liability was determined using a probability-weighted expected return methodology ("PWERM"), which considers multiple potential liquidity outcomes and their respective likelihoods. Under this framework, the valuation incorporates three primary scenarios: (i) an IPO, (ii) a corporate transaction, and (iii) dissolution. The expected economic outcome under each scenario was estimated and then probability-weighted based on management's assumptions to arrive at an overall
10
fair value as of the valuation date. The valuation also incorporates the impact of embedded optionality estimated using a Black-Scholes option pricing framework.
|
|
December 31, 2025 |
Expected term (in years) |
|
|
Expected volatility |
|
|
Risk-free interest rate |
|
|
Expected dividend yield |
|
|
Share price |
|
$ |
On May 7, 2026, the Company completed its IPO. In connection with the closing of the IPO, all outstanding SAFE agreements automatically converted into
The Company recognized an increase in the fair value of the SAFE Liability of $
Accordingly, there was
The following table presents the reconciliation of the SAFE liability measured at fair value on a recurring basis:
Beginning balance – December 31, 2025 |
|
$ |
|
|
Proceeds received under SAFE agreements |
|
|
|
|
Change in estimated fair value |
|
|
|
|
Conversion to common stock |
|
|
( |
) |
Ending balance – June 30, 2026 |
|
$ |
|
On July 22, 2025, the Company purchased
11
The Company has consolidated FRE Australia, including Southeast Metals LLC (“SEM”), which are variable interest entities, and the
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
ASSETS |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Non-current assets |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Mineral interests, which includes $ |
|
|
|
|
|
|
||
Other non-current assets |
|
|
|
|
|
|
||
Total non-current assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
LIABILITIES |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued expenses |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Non-current liabilities |
|
|
|
|
|
|
||
Other non-current liabilities |
|
|
|
|
|
|
||
Total non-current liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
$ |
|
|
$ |
|
||
Additionally, there was a noncontrolling interest of $
Property and equipment, net consisted of the following:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Computer and office equipment |
|
$ |
|
|
$ |
|
||
Machinery equipment |
|
|
|
|
|
|
||
Vehicles |
|
|
|
|
|
|
||
Total property and equipment |
|
|
|
|
|
|
||
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense was $
Mineral interests consisted of the following:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Beginning balance |
|
$ |
|
|
$ |
|
||
Acquired mineral interests |
|
|
|
|
|
|
||
Capitalized land option payments |
|
|
|
|
|
|
||
Ending balance |
|
$ |
|
|
$ |
|
||
Mineral interests include acquired interests in exploration stage properties, including the costs of options to acquire such properties. Exploration costs are expensed as incurred. Costs of rights or options to explore and lease properties are considered exploration costs
12
and expensed as incurred. As of June 30, 2026, the mineral interests capitalized are held by FRE Australia and SEM, whereas the costs of arrangements entered into by AMBPL have been expensed as incurred.
In connection with the Company’s Mineral Rights Assignment and Covenants Agreement (the “Greenfield Agreement”), and following the completion of the Offering, the Company issued
In the event that the Company exercises its options under one or more option agreements and begins commercial exploration, it will be required to make royalty payments based on a percentage of production revenue as defined in the agreements.
Common Stock of REA Inc.
As of June 30, 2026, the Company had reserved shares of common stock for future issuance as follows:
|
|
June 30, 2026 |
|
|
Common stock warrants |
|
|
|
|
2025 Equity Incentive Plan: |
|
|
|
|
Unvested RSUs |
|
|
|
|
2026 Equity Incentive Plan: |
|
|
|
|
Unvested RSUs |
|
|
|
|
Shares available for future grants |
|
|
|
|
|
|
|
|
|
On August 12, 2025, the Company's Board of Directors adopted the Rare Earth Americas Ltd. 2025 Equity Incentive Plan (the “2025 Plan”). The 2025 Plan provides for the grant of stock-based awards to employees, directors, and consultants. Under the 2025 Plan,
On April 10, 2026, the Company's stockholders approved the Rare Earths Americas, Inc. 2026 Equity Incentive Plan (the "2026 Plan"), which became effective in connection with the Company's IPO and superseded the 2025 Plan. The 2026 Plan provides for the grant of stock-based awards to employees, directors, and consultants, and
Through July 21, 2025, some Rare Earths Americas Limited (“REA Australia”) employees that provided services to Alpha were eligible to participate in equity-settled stock-based compensation plans that REA Australia operates for its employees and consultants. None of REA Australia's plans are cash-settled.
Restricted Stock Units (“RSUs”)
During the six months ended June 30, 2026, the Company granted RSUs to employees and directors, experienced forfeitures of outstanding RSUs, and, in connection with the completion of the IPO, recognized the vesting of RSUs subject to a liquidity-based performance vesting condition. The grant-date fair value of RSUs granted during the period was determined using the valuation methodologies described below.
The fair value of RSUs granted prior to the IPO was determined using a PWERM, assuming an (i) IPO and (ii) corporate transaction scenario. The expected economic outcome under each scenario was estimated and then probability-weighted based on management's assumptions to arrive at an overall fair value as of the valuation date. In the IPO scenario, the RSUs are valued based on an expected IPO price, which is discounted for the lack of marketability between the valuation date and the future expected IPO date. In a corporate transaction scenario, the total equity value was determined based on a market approach and allocated to the RSUs using the option pricing method ("OPM"). At issuance, the key assumptions used in pricing these RSUs were the expected timing of the Company's IPO, estimated IPO price, common stock price used in the change of control scenario, probability weighting of the change of control scenarios, and discount for lack of marketability.
Following the completion of the IPO on
13
the Company's common stock on the date of grant, and the probability-weighted scenario methodology described above is no longer applied to such grants.
The following table summarizes the assumptions used in the IPO scenario to estimate the fair value of the RSUs granted prior to the IPO:
Expected IPO Date |
|
|
Expected IPO Price per Share |
|
$ |
Discount for Lack of Marketability |
|
|
Probability of Occurring |
|
The following table summarizes the assumptions used in the OPM to estimate the fair value of the RSUs granted prior to the IPO:
Expected term (in years) |
|
|
Expected Volatility |
|
|
Risk-free interest rate |
|
|
Expected dividend yield |
|
|
Discount for Lack of Marketability |
|
The discount for lack of marketability was determined considering quantitative models, empirical studies, and market data.
Activity during the six months ended June 30, 2026 in RSUs related to employees and directors was as follows:
|
|
Number of Shares |
|
|
Weighted-Average Grant Date |
|
||
Unvested Balance—December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Unvested Balance—June 30, 2026 |
|
|
|
|
$ |
|
||
Vesting solely upon a service condition |
|
|
|
|
|
|
||
The total fair value of RSUs held by employees and directors that vested during the three and six months ended June 30, 2026 was $
Activity during the six months ended June 30, 2026 in RSUs related to nonemployees was as follows:
|
|
Number of Shares |
|
|
Weighted-Average Grant Date Fair Value |
|
||
Unvested Balance—December 31, 2025 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
Unvested Balance—June 30, 2026, of which: |
|
|
|
|
$ |
|
||
Vesting solely upon a service condition |
|
|
|
|
|
|
||
The total fair value of RSUs held by nonemployees that vested during the three and six months ended June 30, 2026 was $
Warrants
In connection with the Company's acquisition of FRE Australia in July 2025, the Company granted warrants which are considered stock-based payments. The Company recognized stock-based compensation expense of ($
14
Stock-Based Compensation Expense
Stock-based compensation expense included in the condensed consolidated statements of operations was as follows:
|
|
For the Three Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
General and administrative expenses: |
|
|
|
|
|
|
||
Stock-Based Compensation Expense — Directors |
|
$ |
|
|
$ |
|
||
Stock-Based Compensation Expense — Employees |
|
|
|
|
|
|
||
Stock-Based Compensation Expense — Consultants |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
For the Six Months Ended June 30, |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
General and administrative expenses: |
|
|
|
|
|
|
||
Stock-Based Compensation Expense — Directors |
|
$ |
|
|
$ |
|
||
Stock-Based Compensation Expense — Employees |
|
|
|
|
|
|
||
Stock-Based Compensation Expense — Consultants |
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
||
As of June 30, 2026, total stock-based compensation expense related to unvested units not yet recognized was $
As of June 30, 2026, total stock-based compensation expense includes $
The Company's accrued expenses consist of the following as of June 30, 2026 and December 31, 2025:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Accrued compensation and payroll taxes |
|
$ |
|
|
$ |
|
||
Accrued exploration costs |
|
|
|
|
|
|
||
Accrued professional fees |
|
|
|
|
|
|
||
Deferred offering costs |
|
|
|
|
|
|
||
Accrued other |
|
|
|
|
|
|
||
Total Accrued expenses |
|
$ |
|
|
$ |
|
||
The Company's other non-current liabilities consist of the following as of June 30, 2026 and December 31, 2025:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||
Stock-based compensation liability |
|
$ |
|
|
$ |
|
||
Lease liability - non-current |
|
|
|
|
|
|
||
Labor contingency |
|
|
|
|
|
|
||
Total Other Non-Current Liabilities |
|
$ |
|
|
$ |
|
||
SAFE
In late December 2025, the Company entered into SAFE agreements to raise $
15
At the time of conversion, the SAFE liability had a carrying value of $
Convertible related party loan - BRC Loan Agreement
In June 2025 AMBPL entered into a loan agreement with BRC, a related party, whereby amounts previously paid by BRC on AMBPL's behalf were formalized into a note payable to BRC. At the inception of the loan agreement, the outstanding balance was $
In connection with the completion of the Company's IPO, the outstanding balance under the BRC loan converted into
During the three and six months ended June 30, 2026, we recorded interest expense of $
REA Australia
REA Australia was the sole shareholder of AMBPL until July 22, 2025. Prior to this date, certain shared costs were allocated to the Company by REA Australia and reflected as expenses in the consolidated financial statements. These allocated shared costs were $
Board of Directors
Unasserted legal claim
The Company uses third-party labor providers to support certain operations. In connection with this model, there is an unasserted, labor-related contingency that could, under certain circumstances, give rise to secondary exposure for the Company if the applicable contractor were unable to satisfy any settlement or judgment. As of the reporting date, no claims have been filed or asserted directly against the Company, and the contractor has not indicated any unwillingness or inability to meet its legal obligations. The contractor remains the primary obligor with respect to any such obligations, and any potential exposure to the Company, if ultimately incurred, would be secondary to the contractor’s primary responsibility.
Based on management’s assessment of the information currently available, the Company determined that a loss related to this matter is probable and reasonably estimable. The Company's balance sheets as of June 30, 2026 and December 31, 2025, include other non-current liabilities of $
The Company will continue to monitor developments and update its estimates as additional information becomes available.
Exercise of Mining Rights Option
On June 30, 2026, the Company, through its subsidiary AMBPL, delivered notice of intent to exercise its option to acquire certain mining concessions, exploration permits, and an exploration application held by the GMC Grantors in Brazil (“GMC Option”), as more fully described in the Prospectus. Under the terms of the GMC Option, the aggregate exercise price of approximately US$
16
Operating segments are defined as components of an entity engaged in business activities from which they may recognize revenues and incur expenses, and about which discrete financial information is available and evaluated regularly by the entity's chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance.
The Company has
The following table summarizes the Company's long-lived assets, which includes mineral interests by geographic region as of June 30, 2026 and December 31, 2025:
|
June 30, 2026 |
|
|
December 31, 2025 |
|
|||
United States |
|
$ |
|
|
$ |
|
||
Brazil |
|
|
|
|
|
|
||
Total Long-lived assets |
|
$ |
|
|
$ |
|
||
Assets other than long-lived assets are not regularly reported to the CODM on the segment basis because they consist primarily of cash and assets not specific to a segment.
Significant segment expense included in the measure of segment profit or loss are shown below and reconciled to net loss before taxes for the three and six months ended June 30, 2026 and 2025:
For the three months ended June 30, 2026 |
|
United States Mining Operations |
|
|
Brazil Mining Operations |
|
|
Total |
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Exploration expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|||
Segment operating loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Corporate and other expenses |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange gain |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of SAFE |
|
|
|
|
|
|
|
|
( |
) |
||
Change in fair value of warrants |
|
|
|
|
|
|
|
|
|
|||
Loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
||
17
For the six months ended June 30, 2026 |
|
United States Mining Operations |
|
|
Brazil Mining Operations |
|
|
Total |
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Exploration expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|||
Segment operating loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Corporate and other expenses |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Foreign exchange loss |
|
|
|
|
|
|
|
|
|
|||
Change in fair value of SAFE |
|
|
|
|
|
|
|
|
( |
) |
||
Change in fair value of warrants |
|
|
|
|
|
|
|
|
( |
) |
||
Loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
||
For the three months ended June 30, 2025 |
|
United States Mining Operations |
|
|
Brazil Mining Operations |
|
|
Total |
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Exploration expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|||
Segment operating loss |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Corporate and other expenses |
|
|
|
|
|
|
|
|
|
|||
Transaction costs |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
||
For the six months ended June 30, 2025 |
|
United States Mining Operations |
|
|
Brazil Mining Operations |
|
|
Total |
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Exploration expenses |
|
$ |
|
|
$ |
|
|
$ |
|
|||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|||
Depreciation expense |
|
|
|
|
|
|
|
|
|
|||
Segment operating loss |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Corporate and other expenses |
|
|
|
|
|
|
|
|
|
|||
Transaction costs |
|
|
|
|
|
|
|
|
|
|||
Interest expense |
|
|
|
|
|
|
|
|
|
|||
Loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
||
SEM Option
On July 31, 2026, FRE US and FRE Australia, subsidiaries of the Company, entered into a Third Amendment to the Option and Project Evaluation Agreement (the "Third Amendment") with SEM and its members. The Third Amendment modifies the original agreement dated December 11, 2020.
Under the Third Amendment, the option target was modified from acquiring
FRE US exercised the option on July 31, 2026, the consideration payable at closing will consist of $
18
Company proposes filing a Form S-1 within three months following the closing date. The Company is obligated to cooperate with SEM to remove restrictive legends from the issued stock in reliance on Rule 144 following the six-month anniversary of the issuance.
The closing of the assignment is subject to customary conditions, including SEM obtaining all required approvals from Weyerhaeuser Company.
Adoption of Executive Severance Plan
On August 7, 2026, the Board approved the adoption of the Company's Executive Severance Plan (the "2026 Severance Plan"), which replaces and supersedes the Company's prior executive severance plan dated August 25, 2025. The 2026 Severance Plan applies to certain executive officers and provides severance benefits upon qualifying terminations of employment, including enhanced severance benefits following a change in control.
Adoption of Short-Term Incentive Plan
On August 7, 2026, the Board also approved the Company's 2026 Short-Term Incentive Plan (the "2026 STIP"), pursuant to which awards for 2026 will be based on achievement of corporate strategic objectives, as determined by the Compensation Committee.
Performance-Based Equity Plan
In addition, on August 7, 2026, the Board approved an equity grant pool of
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the financial condition and results of operations of REA includes information that REA’s management believes is relevant to an assessment and understanding of the Company’s historical operations. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial statements for the three and six months ended June 30, 2026 and 2025 and the respective notes thereto, which are included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited financial statements for the years ended December 31, 2025 and 2024 and the respective notes thereto previously filed with the SEC.
This discussion also contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 related to our current plans, estimates and assumptions, and events and financial trends that may affect our future operating results or financial position. We use terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions to identify forward-looking statements. The forward-looking statements contained herein involve risks and uncertainties that could cause our actual results and the timing of events to differ materially from those expressed in these forward-looking statements due to a number of factors, including those discussed in “Special Note Regarding Forward-Looking Statements” appearing elsewhere in this Quarterly Report on Form 10-Q.
Any reference in this section to “we”, “us”, “our”, “REA”, or the “Company” refers to Rare Earths Americas, Inc. and our consolidated subsidiaries for the periods subsequent to the formation of Rare Earths Americas Ltd. on February 28, 2025 or, as the context requires, to the historical results of Alpha Minerals Brazil Participações Ltda “AMBPL.” Any reference to AMBPL refers to AMBPL prior to the consummation of the Acquisitions (as defined below). Refer to the discussion of “Our Corporate and Operating History and the Related Financial Information Reflected in Our Reported Results” for additional details regarding the operations that comprise REA for the reporting periods discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).
Overview
Our Corporate and Operating History and the Related Financial Information Reflected in Our Reported Results
In February 2025, we were incorporated as Rare Earths Americas Ltd., under the laws of the Cayman Islands, for the purposes of acquiring AMBPL and Foothills Rare Earths Limited (“FRE Australia”) in two transactions that were contingent upon the completion of each other (the “Acquisitions”), as well as to raise the initial capital necessary to support the continued operations of the acquired and combined entities in a private placement transaction (“Private Placement”). The acquisition of AMBPL, a company organized under the laws of Brazil and with a history of exploration activities primarily conducted at two sites in Brazil, and the acquisition of FRE Australia, an Australian incorporated public unlisted Corporation that had performed limited exploration activities in the United States, were both completed on July 22, 2025 (the “Merger Date”). Consideration for the Acquisitions consisted of REA common shares issued to the former shareholders of each entity and, in the case of FRE Australia, the issuance of warrants exercisable for shares of REA’s common stock in exchange for FRE Australia’s previously outstanding options. The Private Placement, which resulted in the raise of $15.9 million after transaction costs, was completed on July 30, 2025. We subsequently completed a re-domestication through the filing of a certificate of conversion, becoming a Texas corporation on October 15, 2025. Following the redomestication, our name changed to Rare Earths Americas, Inc.
We determined that our acquisition of AMBPL is a transaction between entities under common control because the former sole shareholder of AMBPL, Rare Earths Americas Limited (“REA Australia”), retained control of AMBPL through its majority ownership in REA. Furthermore, as (1) our activities through the Merger Date were limited to administrative tasks supporting the Acquisitions and Private Placement and (2) we succeeded to substantially all of the operations of AMBPL, we determined that AMBPL is the predecessor entity to REA for financial statements purposes. As REA and AMBPL were determined to be entities under common control, the acquisition of AMBPL’s net assets were recorded at their historical carrying amounts and these financial statements reflect REA and AMBPL on a consolidated basis for periods following REA’s incorporation in February 2025. Periods prior to February 2025 relate solely to the predecessor operations of AMBPL. FRE Australia was determined to be a variable interest entity and its acquisition was an asset acquisition. See “Note 4 – Asset Acquisition and Variable Interest Entity” in our financial statements for the years ended December 31, 2025 and 2024 included in our final prospectus filed pursuant to Rule 424(b)(4) on May 7, 2026 (File No. 333-295032) (the “Prospectus”). The operating results and cash flows of FRE Australia are reflected in our consolidated results of operations and statement of financial condition for reporting periods subsequent to the Merger Date.
Our Business and Our Strategy
We are an exploration-stage company focused on advancing a portfolio of critical mineral projects targeting high-grade heavy rare earth mineral assets. Our portfolio includes three material projects - Alpha, Constellation, and Shiloh, along with certain non-material early-stage exploration projects, most notably our Homer Project in Goiás, Brazil. All of our properties are currently in exploration stage, and we have not yet commenced mining operations or generated any revenue. Our current operations are focused on defining mineralization for our projects and increasing our understanding of the characteristics and economics of each project. We hold options to purchase or lease mining rights to all of the properties we are exploring. Those options are described in detail in "Note 6 – Mineral Interests" in our
20
financial statements for the years ended December 31, 2025 and 2024. Advancing these projects to development will require significant capital.
We intend to grow the value of our assets by: (1) advancing our project portfolio through land acquisition, drilling, exploration, land consolidation, process flowsheet development, resource definition, metallurgical test work, permitting, and engineering studies in accordance with S-K 1300; (2) pursuing strategic partnerships and financing to accelerate project development; and (3) developing a U.S.-aligned platform to strengthen critical mineral supply chains.
We have assembled a team with extensive mining sector-related experience, including exploration, development, permitting, operations and capital markets, to execute our strategy and pursue the market opportunity available to us.
During the second quarter of 2026, we completed our initial public offering. As of June 30, 2026, we had approximately $76.7 million of cash, cash equivalents and short-term investments. Based on our current operating plans, we believe these resources will be sufficient to fund our anticipated cash requirements for at least the next twelve months.
Our results of operations for the six months ended June 30, 2026 were affected by non-cash stock-based compensation expense and changes in the fair value of warrant and SAFE liabilities. Net cash used in operating activities was $10.3 million for the six months ended June 30, 2026, reflecting continued expenditures on exploration activities in the United States and Brazil, as well as costs associated with operating as a public company.
Recent Developments
North American Mining Segment
We are focused on exploration and development of a potential monazite-bearing sands resource across its Foothills Rare Earths District (the “District”) in Georgia, USA. Monazite is a mineral which hosts rare earths elements (REE), such as Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy) and Terbium (Tb). These elements are key materials used in high-performance permanent magnets, particularly neodymium-iron-boron (NdFeB) magnets, which enable high strength and efficiency in applications such as robotics, electric vehicles, defense systems, wind turbines, and consumer electronics. Dy and Tb are particularly valuable due to their ability to enhance magnet performance at high temperatures.
Monazite-bearing sands systems typically offer several advantages, including the ability to extract near-surface, free-dig material and utilize conventional mineral beneficiation processes; however, the applicability of these characteristics to the District has not yet been established and will require further technical evaluation. These characteristics may be favorable for future technical evaluation, subject to further study.
The Foothills Rare Earths District is at an exploration stage. No mineral resource or mineral reserve has been estimated for the District, and there is no guarantee that further exploration will result in the delineation of a mineral resource. The results presented herein represent exploration data and are insufficient to define a mineral resource. Additional drilling, sampling, and technical studies are required to evaluate the potential for mineral resource estimation.
Over the quarter the Company made significant progress on exploring and developing the District. At the Shiloh property (see Figure 1), over 4,600 meters (m) were drilled to identify and determine zones of rare earths mineralization. Across multiple drilling targets, assay showed geologic results similar with those of monazite-bearing sands system; reinforcing the Company’s exploration thesis that the potential for a rare earths deposit exists. In addition, early exploration results at Liberty Peak (see Figure 1), where drilling has intercepted monazite-bearing sands similar to those encountered at Shiloh more than 50 kilometers away, further supported the potential of the emerging Foothills Rare Earths District.
As of the end of the second quarter of 2026, the Company’s active land position under Exploration & Development Agreements ("EDAs"), mining leases and option agreements totaled 4,254 acres across the District, representing a 53% increase compared to the first quarter of 2026. In addition, REA has short-term access agreements and exploration agreements for initial assessments of prospective properties; total land position for these agreements totaled over 11,500 acres.
21
Figure 1 - Foothills Rare Earths District showing survey areas and existing exploration targets. NURE select radiometric data from the National Uranium Resource Evaluation survey. Areas shown include active land positions consistent with the presence of an alkaline-carbonatite system.
The Company expanded its 2026 Georgia exploration program to include over 8,000m of sonic and direct push drilling at Liberty Peak, in addition to a 20,000m drill program at Shiloh. Rare Earths Americas will also undertake airborne radiometric surveys, geological mapping, and soil sampling across Target Areas 1–3 (See Figure 1) to further define and advance high-priority drill targets across the District. In total, the Company expects to invest approximately $15 million over 2026 to unlock and define the District's rare earths potential. The Company will release additional assay results and exploration updates throughout the third quarter of 2026 and into year-end.
Brazilian Mining Segment
Alpha Project: During the second quarter of 2026, the Company commenced an Initial Assessment (IA) for its Alpha project in Bahia, Brazil. The IA is expected to evaluate an initial mine plan, metallurgical processing, infrastructure requirements, permitting considerations and project economics, and is currently anticipated to be completed in early 2027. Subject to the results of the IA, the Company may undertake additional engineering and economic studies, including a pre-feasibility study. The IA and any subsequent technical studies are important steps in the advancement of a mining project and are intended to provide information necessary to evaluate technical feasibility, economic viability and future development alternatives.
In parallel with the IA, the Company plans to advance activities that may support future technical studies, including an infill drilling program designed to further define the Alpha mineral resource and potentially support the conversion of portions of the current inferred resource classification to measured and indicated classifications. The Company currently plans to complete approximately 13,400m of drilling at the Alpha property in 2026. There can be no assurance that the IA, future technical studies or additional drilling will support the development of the project or result in the conversion of inferred resources to higher-confidence resource classifications. Approximately $5 million is expected to be spent on exploration for the project in 2026.
Homer Project: During the quarter, the Company announced exploration results from its 100%-owned Homer-A project in Goiás, Brazil. Results from multiple exploration programs, including airborne magnetic surveys, soil geochemistry, gamma-radiometric surveys, geological mapping and drilling, were consistent with the Company's interpretation of a prospective alkaline-carbonatite system containing REE and niobium (Nb) mineralization.
22
Exploration activities identified a magnetic anomaly covering more than 35 km² and extending over 6.5 kilometers along its major axis. Initial auger and reverse circulation drilling intersected REE and niobium mineralization across the target area, with several drill holes reporting increasing grades with depth and most holes terminating in mineralization.
Based on these results, the Company commenced an expanded 15,000m reverse circulation and diamond drilling program in June 2026 to further evaluate the scale, continuity and grade distribution of potential mineralization at Homer-A. Initial drill and assay results are expected to be released over the third quarter of 2026. Approximately $5 million is expected to be spent on exploration for the project in 2026.
Exploration at the project remains at an early stage, and additional drilling and technical studies are required to determine the extent, continuity and economic significance. No mineral resource or mineral reserve has been estimated for the Homer-A project, and there can be no assurance that further exploration will result in the delineation of a mineral resource or that any such resource would support future development.
Qualified Persons
The scientific and technical information contained in this Quarterly Report on Form 10-Q has been reviewed and approved by the qualified persons identified below, each of whom is a "qualified person" as defined in Item 1300 of Regulation S-K.
North American Mining Segment. The scientific and technical information relating to the Foothills Rare Earths District, including the Shiloh and Liberty Peak properties, has been reviewed and approved by Paul Dockweiler, Senior Geologist with Geosyntec Consultants, a Certified Professional Geologist (CPG-11379) and Registered Member of the Society for Mining, Metallurgy & Exploration. Mr. Dockweiler is not an employee or officer of the Company and provides services as an independent consultant through Geosyntec Consultants.
Brazilian Mining Segment — Alpha Project. The scientific and technical information relating to the Alpha and Constellation projects was prepared by McGarry Geoconsulting Corp. and Karst Geo Solutions LLC, each acting as a qualified person. Neither firm is an employee or affiliate of the Company, and each provides services as an independent consultant. The Alpha Project Technical Report Summary, prepared by McGarry Geoconsulting Corp. and Karst Geo Solutions LLC, is filed as Exhibit 96.3 to the Company's Registration Statement on Form S-1.
Brazilian Mining Segment — Homer-A Project. The scientific and technical information relating to the Homer-A project has been reviewed and approved by Leandro Coracini Ollita, a qualified person registered with the Brazilian Commission for Resources and Reserves (CBRR), Registration No. 023160. Mr. Ollita is an employee of the Company serving as Project Manager, Operations.
Summary of Historical Operations and Expected Trends
General
As an exploration-stage company, we have not begun to generate operating revenues, nor can we expect to generate operating revenues in the foreseeable future. Our financial results reported for the three and six months ended June 30, 2026 and 2025 are not reflective of our expectations for our ongoing operations, as further discussed in the sections titled “Factors that Will Impact Our Exploration Costs” and “Factors that Will Impact Our General and Administrative and Other Operating Costs” included in the Prospectus.
Results of Operations
Summary
We have no operating revenues. We are dependent on equity or other external financings to fund the execution of our business plans and operations, including mineral exploration and evaluation for economic viability; general and administrative (“G&A”) costs; interest expense and other costs. We expect to incur operating losses until such time that an economic mineral resource is identified, developed and put into profitable commercial production.
23
Comparison of three and six months ended June 30, 2026 and 2025
The following tables set forth our historical results for the periods indicated, and the variances in amounts reported for the comparable reporting periods (dollars in thousands), percent changes are not included as they are not meaningful in this comparison:
|
|
For the three months ended June 30, |
|
|
Change |
|
||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|||
Statements of Operations Data: |
|
|
|
|
|
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Exploration expenses |
|
$ |
4,566 |
|
|
$ |
115 |
|
|
$ |
4,451 |
|
General and administrative expenses |
|
|
8,174 |
|
|
|
269 |
|
|
|
7,905 |
|
Depreciation expense |
|
|
36 |
|
|
|
2 |
|
|
|
34 |
|
Transaction costs |
|
|
— |
|
|
|
157 |
|
|
|
(157 |
) |
Total operating expenses |
|
|
12,776 |
|
|
|
543 |
|
|
|
12,233 |
|
Operating loss |
|
|
(12,776 |
) |
|
|
(543 |
) |
|
|
(12,233 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
503 |
|
|
|
— |
|
|
|
503 |
|
Interest expense |
|
|
(29 |
) |
|
|
(58 |
) |
|
|
29 |
|
Foreign exchange gain |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Change in fair value of SAFE |
|
|
(1,216 |
) |
|
|
— |
|
|
|
(1,216 |
) |
Change in fair value of warrants |
|
|
727 |
|
|
|
— |
|
|
|
727 |
|
Total other (expenses) income |
|
|
(14 |
) |
|
|
(58 |
) |
|
|
44 |
|
Loss before income taxes |
|
|
(12,790 |
) |
|
|
(601 |
) |
|
|
(12,189 |
) |
Provision for income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
$ |
(12,790 |
) |
|
$ |
(601 |
) |
|
$ |
(12,189 |
) |
|
|
For the six months ended June 30, |
|
|
Change |
|
||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|||
Statements of Operations Data: |
|
|
|
|
|
|
|
|
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Exploration expenses |
|
$ |
6,631 |
|
|
$ |
165 |
|
|
$ |
6,466 |
|
General and administrative expenses |
|
|
10,890 |
|
|
|
518 |
|
|
|
10,372 |
|
Depreciation expense |
|
|
59 |
|
|
|
3 |
|
|
|
56 |
|
Transaction costs |
|
|
— |
|
|
|
157 |
|
|
|
(157 |
) |
Total operating expenses |
|
|
17,580 |
|
|
|
843 |
|
|
|
16,737 |
|
Operating loss |
|
|
(17,580 |
) |
|
|
(843 |
) |
|
|
(16,737 |
) |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
630 |
|
|
|
— |
|
|
|
630 |
|
Interest expense |
|
|
(74 |
) |
|
|
(59 |
) |
|
|
(15 |
) |
Foreign exchange loss |
|
|
(3 |
) |
|
|
— |
|
|
|
(3 |
) |
Change in fair value of SAFE |
|
|
(4,625 |
) |
|
|
— |
|
|
|
(4,625 |
) |
Change in fair value of warrants |
|
|
(7,919 |
) |
|
|
— |
|
|
|
(7,919 |
) |
Total other (expenses) income |
|
|
(11,991 |
) |
|
|
(59 |
) |
|
|
(11,932 |
) |
Loss before income taxes |
|
|
(29,571 |
) |
|
|
(902 |
) |
|
|
(28,669 |
) |
Provision for income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
$ |
(29,571 |
) |
|
$ |
(902 |
) |
|
$ |
(28,669 |
) |
Operating Costs and Expenses
Total operating expenses increased by $12.2 million and $16.7 million in the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. The increases in both periods reflect the Company's expanded scale of operations following the acquisition of FRE Australia and the continued build-out of its organizational and exploration capabilities. The increase for the three months ended June 30, 2026 was further driven by stock-based compensation recognized in connection with the completion of the Company's IPO in May 2026, while the increase for the six-month period also reflects exploration and administrative activity in the first quarter of 2026 against a prior-year period in which the Company's operations were substantially more limited.
Exploration and evaluation expenses. Exploration and evaluation expenses increased by $4.5 million and $6.5 million in the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025. The increase was primarily attributable to
24
increased exploration activity following the acquisition of FRE Australia, which expanded the Company’s exploration portfolio and operational footprint. The increased exploration activity consisted of increased drilling costs, geological and technical consulting fees, exploration personnel compensation, and assay costs. Exploration and evaluation expenses during the prior‑year period were minimal, reflecting the Company’s more limited scope of operations at that time.
General and administrative expenses. General and administrative expenses increased by $7.9 million and $10.4 million in the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025. The increase was primarily driven by higher stock-based compensation recognized in connection with the completion of the Company's initial public offering, as well as increased personnel-related costs and professional service fees, reflecting the growth of the Company's operations following the acquisition of FRE Australia, including the expansion of management and administrative functions and increased public-company and regulatory compliance activities.
Depreciation expense. Depreciation expense increased by $34 thousand and $56 thousand in the three and six months ended June 30, 2026 as compared to three and six months ended June 30, 2025. The increase was primarily attributable to depreciation of property and equipment placed in service during 2025 and the first half of 2026, including vehicles, exploration and field equipment, and computer and office equipment, as the Company expanded its operations following recent acquisitions.
Transaction costs. Transaction costs decreased by $157 thousand in the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025. Transaction costs in the 2025 periods represent legal, advisory, due-diligence, and other professional fees incurred in connection with the Company's acquisitions of AMBPL and FRE Australia. No transaction costs were incurred in the three and six months ended June 30, 2026.
Other Income and Expense
Interest income. Interest income increased by $503 thousand and $630 thousand in the three and six months ended June 30, 2026 as compared to three and six months ended June 30, 2025. The increase was primarily due to higher balances held in interest bearing accounts during the quarter.
Interest expense. Interest expense decreased by $29 thousand and increased by $15 thousand in the three and six months ended June 30, 2026 as compared to three and six months ended June 30, 2025, respectively. The fluctuations are due to the related party loan agreement with Brazil Royalty Corp Participacoes E Investments Ltda. (“BRC”), which was executed in 2025 and converted to common shares in May 2026.
Foreign exchange gain or loss. The Company incurred an immaterial gain and a $3 thousand loss in the three and six months ended June 30, 2026, respectively, as compared to no gain or loss in three and six months ended June 30, 2025, due to remeasurement of cash accounts held at FRE Australia.
Change in fair value of SAFE. Change in fair value of Simple Agreement for Future Equity (“SAFE”) was a $1.2 million loss and $4.6 million loss in the three and six months ended June 30, 2026. The change was attributable to the remeasurement of the SAFE liability at fair value during the quarter, reflecting changes in valuation assumptions, primarily the share price assumptions, and including the passage of time. No change in fair value of SAFE was recognized in the prior‑year period as the SAFE was executed in December 2025.
Change in fair value of warrants. Change in fair value of warrants was a $727 thousand gain and $7.9 million loss in the three and six months ended June 30, 2026. The change was attributable to the remeasurement of warrant liabilities at fair value during the quarter, reflecting changes in valuation assumptions, primarily the share price assumptions, and including the passage of time. No change in fair value of warrants was recognized in the prior‑year period as the warrants were issued during the transaction in July 2025.
Supplemental Discussion of Performance by Reportable Segment
United States Mining Operations Segment
Segment Operating loss for the Company's United States Mining Operations was as follows (dollars in thousands):
|
|
For the three months ended June 30, |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Segment Operating loss |
|
$ |
(3,799 |
) |
|
$ |
— |
|
|
$ |
(3,799 |
) |
|
|
— |
|
|
|
For the six months ended June 30, |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Segment Operating loss |
|
$ |
(5,699 |
) |
|
$ |
— |
|
|
$ |
(5,699 |
) |
|
|
— |
|
25
Operating loss from our United States Mining Operations increased $3.8 million and $5.7 million in the three and six months ended June 30, 2026 compared to the prior year period, driven primarily by the acquisition of FRE Australia and the related exploration activities and costs incurred related to the Shiloh project. Operating loss of our United States Mining Operations segment is expected to further increase in subsequent periods. Refer to the discussions of “Factors that Will Impact Our Exploration Costs” and “Acquisition of FRE Australia” included in the Prospectus.
Brazil Mining Operations Segment
Segment Operating loss for the Company's Brazil Mining Operations was as follows (dollars in thousands):
|
|
For the three months ended June 30, |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Segment Operating loss |
|
$ |
(1,030 |
) |
|
$ |
(207 |
) |
|
$ |
(823 |
) |
|
|
398 |
|
|
|
For the six months ended June 30, |
|
|
Change |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|
% |
|
||||
Segment Operating loss |
|
$ |
(1,554 |
) |
|
$ |
(370 |
) |
|
$ |
(1,184 |
) |
|
|
320 |
|
Operating loss from our Brazil Mining Operations increased $0.8 million and $1.2 million in the three and six months ended June 30, 2026 compared to the prior year period, primarily due to increases in general and administrative costs and exploration activities and exploration spend during the period. The increase in general and administrative costs are due to changes in the Company's operating structure and are expected to remain consistent at the segment level in future periods. Refer to the discussions of “Factors that Will Impact Our Exploration Costs” and “Acquisition of FRE Australia” included in the Prospectus.
Liquidity and Capital Resources
Sources and Uses of Liquidity
We consider highly liquid investments purchased with original maturities of three months or less to be cash equivalents. As of June 30, 2026 and December 31, 2025, we had $10.1 million and $22.8 million, respectively, in cash and cash equivalents. In connection with our initial public offering, we established short-term investment accounts to hold funds designated for land acquisition, mineral licenses and lease payments, option payments, drilling, metallurgical test work, permitting, exploration, evaluation, land consolidation, engineering studies, and working capital and general corporate purposes. These short-term investments are maintained in highly liquid securities to ensure we have adequate resources to fund planned exploration and development programs.
We are an exploration stage company and, since our inception, we have not generated revenues. We incurred operating losses of $12.8 million and $17.6 million in three and six months ended June 30, 2026 and $0.5 million and $0.8 million in the prior year periods, respectively, and have reported an accumulated deficit of $49.4 million and $19.8 million as of June 30, 2026 and December 31, 2025, respectively. We have primarily relied on equity financing to fund our operating and investing activities – including, development and pursuit of our business plan; our mineral exploration and evaluation activities; our general and administrative costs and our capital expenditures. In addition, in the future we will continue to rely on equity financing to meet obligations as they become due and for future purchases of exploration and evaluation assets.
Our predominant source of cash is from financing activities. In 2025, we raised cash through issuances of our common stock for the primary purpose of funding working capital associated with exploration expenses and general and administrative expenses, capital expenditures, and investments supporting our strategy for advancing our portfolio of critical mineral projects targeting high-grade heavy rare earths mineral assets. In 2024, we were primarily funded through payables to related parties.
In December 2025, we raised $11.7 million in proceeds through the issuance of SAFE agreements in a private placement, and in January 2026 we raised an additional $3.4 million through the issuance of SAFE agreements.
In May 2026, the Company completed its initial public offering ("IPO"), raising net proceeds of approximately $64.2 million comprised of $58.9 million from the initial offering and $5.3 million from the underwriters' exercise of the over-allotment option, net of underwriting discounts and commissions.
Our current assets exceeded our current liabilities by $75.6 million as of June 30, 2026, compared to $19.3 million as of December 31, 2025. The increase of $56.3 million was primarily attributable to the completion of the IPO in May of 2026.
26
The following table is a condensed schedule of cash flows provided as part of the discussion of liquidity and capital resources:
Cash flow Statement
|
|
For the six months ended June 30, |
|
|
Change |
|
||||||
|
|
2026 |
|
|
2025 |
|
|
$ |
|
|||
Other Financial Data (in thousands): |
|
|
|
|
|
|
|
|
|
|||
Net cash (used in) provided by operating activities |
|
$ |
(10,265 |
) |
|
$ |
256 |
|
|
$ |
(10,521 |
) |
Net cash used in investing activities |
|
|
(67,148 |
) |
|
|
(2 |
) |
|
|
(67,146 |
) |
Net cash provided by (used in) financing activities |
|
|
64,756 |
|
|
|
(206 |
) |
|
|
64,962 |
|
Currently, we do not maintain a credit facility or have debt from financial institutions. Since inception, we have predominately relied on equity financing to fund our operations, land acquisitions, and capital expenditures.
As of June 30, 2026, we expect material cash expenditures over the next twelve months to include the following:
These are planned estimates based on our current exploration and development plans. Actual expenditures may differ materially depending on exploration results, permitting timelines, equipment and personnel availability, cost escalation, and our ability to raise additional capital. We may also reallocate spending among projects or defer planned activities. We believe that funds raised through issuance of SAFE agreements and the net proceeds from our initial public offering that closed on May 7, 2026 will be sufficient to fund our cash needs for the next twelve months. Historically, we have been successful in raising cash through equity financings; however, no assurances can be given that additional financing will be available in amounts sufficient to meet our needs or on terms that are acceptable to us.
Operating Activities
During the six months ended June 30, 2026, our operating activities used $10.3 million of net cash, as compared to net cash provided of $256 thousand during the six months ended June 30, 2025. The $10.5 million increase in net cash used in operating activities was primarily due to a $28.8 million increase in net loss driven by the expanded operational activities of the Company as a result of the acquisition of FRE Australia, as well as non-cash charges recognized on our SAFE and warrant liabilities. This increase in reported net loss is partially offset by non-cash items, including a $7.9 million increase in the fair value of warrant liabilities, a $4.6 million increase in the fair value of SAFE liabilities, and $7.1 million of stock-based compensation. Changes in operating assets and liabilities resulted in $0.8 million of net cash used from changes in working capital, primarily related to the Company's expanded operational activities.
Investing Activities
Our investing activities used $67.1 million of cash in the six months ended June 30, 2026, as compared to $2 thousand during the six months ended June 30, 2025. Cash used by investing activities increased primarily due to $66.6 million of net purchases of short-term investments funded with proceeds from our initial public offering, as well as $0.4 million of purchases of property and equipment.
Financing Activities
During the six months ended June 30, 2026 and 2025, our financing activities provided $64.8 million and used $0.2 million of cash, respectively. Financing activities during the six months ended June 30, 2026 consisted primarily of $64.2 million of net proceeds from the issuance of common stock in our IPO, including the exercise of the underwriters' over-allotment option and net of commissions, $3.4 million of SAFE proceeds, and $0.2 million of proceeds from warrant exercises, offset partially by $2.9 million of payments of deferred offering costs and $0.2 million of shares repurchased to satisfy employee tax withholding obligations.
Off-Balance Sheet Arrangements
Other than as otherwise described in the Prospectus, we do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.
27
Risks and Uncertainties Associated with Future Results of Operations
We operate in an industry that is subject to intense competition, development risk, and changes in U.S. governmental policies related to green energy, defense spending and dependence on foreign suppliers. Our operations are subject to significant risks and uncertainties including financial and operational risks, as well as the potential risk of business failure.
We have not yet established that our projects contain any commercially exploitable quantities of proven and probable mineral reserves, and we may not be able to do so. Even if we eventually establish commercially exploitable quantities of mineral reserves, we may not be able to extract those minerals economically. Both mineral exploration and development involve a high degree of risk, and few properties that are explored are ultimately developed into producing mines. The commercial viability of an established mineral deposit will depend on several factors including the size, grade, and other attributes of the mineral deposit, as well as proximity of the deposit to infrastructure, government regulation, and market prices, among other things. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral deposit unprofitable.
Our ability to advance projects depends on successfully completing studies to verify resources, reserves, and commercial viability, securing sufficient financing for exploration, permitting, and infrastructure development, and managing potential cost increases in exploration, construction, and operations due to fluctuations in fuel, power, materials, and other supplies.
For additional information see the section entitled “Risk Factors — Risks Related to Our Business” included in the Prospectus.
Critical Accounting Estimates
See Note 2 – Significant Accounting Policies to our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, included in the Prospectus for a description of our significant accounting policies. We consider the following accounting estimates critical to understanding and evaluating our consolidated financial condition and the results of our operations.
Exploration Costs and Mineral Interests
General
Mineral interests consist of options to acquire mineral properties with rights to explore during the option period. Capitalized costs of the options were either asset purchases or payments to option counterparties. Mineral interests will not be amortized until the underlying property is converted to the production stage. As of June 30, 2026, none of the Company's properties were in the production stage and, therefore, the carrying values of the associated mineral interests are not being amortized. Exploration costs are being expensed as incurred until it is determined that a mining deposit can be economically and legally extracted or produced based upon established proven or probable reserves.
Assessments for Recoverability and Impairment
We assess the carrying values of our mineral interests for recoverability as of the end of each quarterly reporting period and whenever information or circumstances indicate the potential for impairment. There were no circumstances indicating the potential for impairment as of June 30, 2026.
To assess recoverability, we would compare estimated undiscounted future net cash flows attributable to a mineral interest (when determinable) with our carrying costs and future obligations related to the mineral interest. If it is determined that the estimated future undiscounted cash flows related to a mineral interest are less than the carrying value of the mineral interest, an impairment loss is required to be measured and recorded.
Future net cash flow estimates are dependent upon economic reserves being discovered or developed on the related property; the costs of permitting, financing, start-up, and commercial production related to a mineral interest; and commodity prices. When estimates of future net cash flows are not determinable and other conditions indicate the potential for impairment, management uses available market information and/or third-party valuation experts to assess if the carrying value of a mineral interest can be recovered and to estimate fair value.
Stock-Based Compensation
Our stock-based compensation consists primarily of restricted stock units ("RSUs") granted under the Rare Earth Americas Ltd. 2025 Equity Incentive Plan and the Rare Earths Americas, Inc. 2026 Equity Incentive Plan (the "Plans"). We account for stock-based compensation awards based on the fair value of the award as of the grant date, which for RSUs was based on the fair value of the underlying common stock at the time of the grant.
The Company recognizes stock-based compensation expense on a straight-line basis over the awards' requisite service period. Prior to the Company's initial public offering in May 2026, certain RSUs were subject to a performance-based vesting condition tied to a liquidity event. In connection with the completion of the IPO on May 7, 2026, the performance-based vesting condition was satisfied and 581,609 RSUs vested. The Company recognized $3.8 million in stock-based compensation expense upon vesting of these performance-based RSUs and an additional $1.5 million related to awards subject to time-based vesting conditions.
28
As of June 30, 2026, the Company has $4.9 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of 1.9 years. Following the completion of the Company's IPO on May 7, 2026, all liquidity-event vesting conditions were satisfied, and the remaining unrecognized compensation cost relates solely to service-based vesting conditions.
Instruments with Characteristics of Liabilities and Equity
As of June 30, 2026, the Company has outstanding warrants exercisable into shares of the Company's common stock. The Company accounts for these instruments as liability-classified based on an assessment of their specific terms and applicable authoritative guidance. The instruments are required to be recorded at their initial fair value on the date of issuance, and are remeasured to their fair value on each balance sheet date thereafter, with any change in fair value recognized in the Company’s condensed consolidated statements of operations.
Recently Adopted Accounting Standards
See Note 2 –Significant Accounting Policies of the notes to our condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q.
Emerging Growth Company Status
In April 2012, the JOBS Act was enacted. Section 107(b) of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of the accounting standards election, we will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies which may make comparison of our financials to those of other public companies more difficult.
We expect to retain our emerging growth company status until the earliest of:
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Management, including our principal executive officer and principal financial and accounting officer, must evaluate the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2026 as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Due to the material weakness described below, our disclosure controls and procedures were not effective as of June 30, 2026.
Description of Material Weakness
The material weaknesses we identified include:
29
Remediation Plan
We have taken and will continue to take action to improve our internal control over financial reporting and remediate these material weaknesses, including:
While management is making improvements to our control environment and business processes to support and scale with our growing operations, the identified material weaknesses remain un-remediated. We may not be able to fully remediate these material weaknesses until these steps have been completed and the internal controls have been operating effectively for a sufficient period of time. This evaluation process, including testing the effectiveness of the remediation efforts, may be concluded prior to December 31, 2026, but may extend into 2027. Additionally, as stated above, we have not performed an evaluation of our internal control over financial reporting; accordingly, we cannot ensure that we have identified all, or that we will not in the future have additional, material weaknesses. Material weaknesses may still exist when we report on the effectiveness of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act, beginning with our second annual report.
Changes in Internal Control over Financial Reporting
In connection with the preparation and audit of our financial statements as of and for the fiscal year ended December 31, 2025, material weaknesses have been identified in our internal control over financial reporting. While we have begun the remediation of certain controls we have not fully remediated the material weakness. Thus, there was no change in our internal control over financial reporting that occurred during the fiscal quarter of 2026 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not currently a party to any material proceedings. Regardless of outcome, such proceedings or claims could have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors, and the possibility of unfavorable outcomes.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities
During the six months ended June 30, 2026, in connection with the completion of the Company's initial public offering, all outstanding SAFE agreements automatically converted into 1,037,100 shares of the Company's common stock in accordance with their terms. The Company also issued 201,807 shares of common stock upon conversion of the related-party convertible loan at a fixed conversion price of $6.55 per share, 19,052 shares of common stock pursuant to the Greenfield Agreement, and an aggregate of 46,610 shares of common stock upon the exercise of previously issued warrants.
The securities described above were issued in reliance upon exemptions from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation S promulgated thereunder. No underwriting discounts or commissions were paid in connection with any of the foregoing transactions.
Use of Proceeds
On May 7, 2026, the Company completed its initial public offering of 3,333,331 shares of common stock at a public offering price of $19.00 per share. The Company received net proceeds of approximately $58.9 million, after deducting underwriting discounts and commissions but before payment of offering expenses. On May 14, 2026, the underwriters exercised a portion of their over-allotment option and purchased an additional 299,789 shares of common stock, resulting in additional net proceeds of approximately $5.3 million.
30
There has been no material change in the planned use of proceeds from the initial public offering as described in the Company's final prospectus filed with the SEC pursuant to Rule 424(b)(4) on May 7, 2026. The Company expects to continue using the remaining proceeds principally to fund exploration, evaluation and development activities at the Shiloh, Alpha, Constellation and Homer projects, as well as for working capital and general corporate purposes. Pending such uses, the Company invests the remaining net proceeds in cash, cash equivalents and short-term investments.
Issuer Purchases of Equity Securities
The following table contains information about shares withheld to satisfy tax withholding obligations in connection with the vesting of restricted stock units granted under the Company's equity incentive plans. These shares were not repurchased pursuant to a publicly announced share repurchase program:
Period |
Total Number of Shares Purchased |
|
Average Price Paid Per Share |
|
Shares Purchased as Part of Publicly Announced Program |
|
Maximum Number of Shares Remaining Under the Program |
|
||||
April 1 – April 30, 2026 |
|
— |
|
$ |
— |
|
|
— |
|
|
— |
|
May 1 – May 31, 2026 |
|
7,154 |
|
$ |
22.69 |
|
|
— |
|
|
— |
|
June 1 – June 30, 2026 |
|
— |
|
$ |
— |
|
|
— |
|
|
— |
|
Total |
|
7,154 |
|
|
|
|
— |
|
— |
|
||
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Board Structural Changes
On August 7, 2026, the Board of Directors (the “Board”) of Rare Earths Americas, Inc. (the “Company”), upon the recommendation of the Nominating and Corporate Governance Committee, appointed Daniel Shribman as Executive Chairman of the Board effective as of August 12, 2026. In connection with this appointment, the Nominating and Corporate Governance Committee determined that Mr. Shribman
As a result of Mr. Shribman’s loss of independence, the Audit Committee will be reconstituted as of August 12, 2026 to consist of Hugo Schumann (Chair), Ivy Estabrooke, and Keith Phillips. The Compensation Committee will be reconstituted as of August 12, 2026 to consist of Keith Phillips (Chair), Reta Jo Lewis, and Ivy Estabrooke.
Adoption of Executive Severance Plan
On August 7, 2026, the Board approved the adoption of the Company’s Executive Severance Plan (the “2026 Plan”), which replaces and supersedes the Company’s prior executive severance plan dated August 25, 2025. The 2026 Plan applies to the following executive officers: Donald Swartz, Chief Executive Officer; Jennifer Grafton, Chief Operating Officer, General Counsel and Secretary; Cheryl Kerr, Chief Accounting Officer and Treasurer; Kevin McCarty, Vice President of Exploration; and Eric Schrimsher, Director of Exploration.
Under the 2026 Plan, the applicable severance multiplier is 1.0x base salary prior to a Change in Control and 2.0x base salary following a Change in Control for Ms. Grafton, Ms. Kerr, Mr. McCarty, and Mr. Schrimsher. Mr. Swartz is entitled to a severance multiplier of 1.5x base salary prior to a Change in Control and 2.5x base salary following a Change in Control.
The foregoing description of the 2026 Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the 2026 Plan, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
31
Adoption of 2026 Short-Term Incentive Plan
On August 7, 2026, the Board approved the Company’s 2026 Short-Term Incentive Plan (the “2026 STIP”). Given the mid-year IPO of the Company, the 2026 STIP for the named executive officers will be based on achievement of key corporate strategic objectives, which determination of achievement and payout will be at the sole discretion of the Compensation Committee. The 2026 STIP includes a safety override provision that could reduce payout to zero in the event of a workplace fatality or other material workplace safety issue during the performance period. The plan also contains a clawback provision applicable in the event of a material financial restatement or a material breach of the Company’s Code of Conduct.
Performance-Based Equity Plan
On August 7, 2026, the Board approved an equity grant pool of 420,000 performance stock units (“PSUs”) and authorized the following equity awards, all with a grant date of August 12, 2026:
The PSUs granted to the executives are subject to a three-year performance period commencing on the grant date. The number of PSUs that may be earned ranges from 0% to 100% of the target number of PSUs, contingent upon the performance of the Company’s stock price. Except in the case of certain special vesting events, an executive must remain in continuous service with the Company from the grant date through the applicable vesting date to earn any PSUs during the performance period.
The PSUs are divided into four equal tranches, each representing 25% of the target PSUs. Each tranche vests independently if the Company's common stock achieves a specified volume-weighted average price over twenty (20) consecutive trading days (the “20-Day VWAP”) at any time during the performance period.
The 20-Day VWAP stock price hurdles for each tranche are as follows:
All equity awards granted under the plan are subject to a “double-trigger” change in control provision. Under this provision, the accelerated vesting of the PSUs requires both the occurrence of a change in control of the Company and a subsequent qualifying termination of the executive's employment.
The foregoing description of the Performance Share Agreement Under the Rare Earths Americas, Inc. 2026 Equity Incentive Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Performance Share Agreement, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.
Rule 10b5-1 Trading Arrangements
During the three months ended June 30, 2026, no officer or director of the Company adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.
32
Item 6. Exhibits.
Exhibit Number |
|
Description |
10.1* |
|
|
10.2* |
|
Rare Earths Americas, Inc. Executive Severance and Change in Control Plan |
10.3* |
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Performance Share Agreement Under the Rare Earths Americas, Inc. 2026 Equity Incentive Plan |
31.1* |
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31.2* |
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32.1* |
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32.2* |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
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Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Rare Earths Americas, Inc. |
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Date: August 11, 2026 |
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By: |
/s/ Donald Swartz |
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Donald Swartz |
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Chief Executive Officer and President (Principal Executive Officer) |
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Date: August 11, 2026 |
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By: |
/s/ Cheryl Kerr |
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Cheryl Kerr |
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Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) |
34