UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ 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

001-41711

USA RARE EARTH, INC.

(Exact name of registrant as specified in its charter)

Delaware		98-1720278
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

100 W Airport Road,

Stillwater, OK 74075

(Address of principal executive offices and zip code)

(813)-867-6155

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	USAR	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock, each at an exercise price of $11.50 per share	USARW	The Nasdaq Stock Market LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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 ☐ No ☒

As of May 9, 2025, the Registrant had 90,836,766 shares of common stock, par value $0.0001 per share and 5,018,834 shares of 12.0% Series A Cumulative Convertible Preferred Stock, issued and outstanding.

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
Part II. Other Information
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		43

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy, plans and objectives of management for future operations, and the benefits and timing of the rollout of our magnet production facility and timing of expected milestones, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

●

the ability to realize the benefits expected from the Business Combination;

●

the ability to maintain the listing of the Common Stock and the USAR Warrants on Nasdaq;

●

the ability to raise financing in the future and to comply with restrictive covenants related to long-term indebtedness;

●

the future financial performance of USAR;

●

USAR’s ability to comply with laws and regulations applicable to its business; and

●

expansion plans and opportunities.

These forward-looking statements are based on information available as of the date of this Quarterly Report and USAR’s management team’s current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside the control of USAR and its directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing USAR’s management team’s views as of any subsequent date. USAR does not undertake any obligation to update, add or to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements. Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:

●

the fact that USAR has no history in commercial operations which limits the accuracy of any forward-looking forecasts, prospects or business outlook or plans;

●

that USAR has generated negative operating cash flows and may experience negative cash flow from operations in the future and that USAR may not be able to generate positive cashflow from its expected future business operations;

●

risks related to the development of our magnet production facility and the timing of expected production milestones and the timing and amount of future production, including any time delays, unforeseen expenses, increased capital costs, negative tariff implications, and other complications;

●

timing of future cash flow provided by operating activities, if any;

●

the magnet production business is subject to the availability of rare earth element (“REE”) oxide and metal feedstock;

●

the supply and demand for rare earth minerals, including fluctuations in demand for, and prices of, Neodymium Iron Boron (“NdFeB or neo”) magnets, magnet materials, and necessary feedstock;

●

uncertainty in any mineral estimates, uncertainty in any geological, metallurgical, and geotechnical studies and opinions;

	●	inability to convert current commercial discussions and/or memorandums of understanding with customers into definitive contracts;

	●	the growth of existing and emerging uses for neo magnets; changes in the global supply of neo magnets due to tariffs, trade restrictions, or otherwise;

●

competition in the magnet manufacturing industry;

●

changes in China’s or the United States’ political environment and policies;

●

inability to obtain sufficient capital or other resources necessary to provide for such production;

●

any failure by management to manage growth properly which could negatively impact our business;

●

power or other utility disruption or shortage and limited access to raw materials;

●

costs of production, capital expenditures, requirements for additional capital, and increasing costs, including rising electricity and other utility costs and cost increases due to tariffs;

●

fluctuations in transportation costs or disruptions in transportation services or damage or loss during transport;

●

our ability to build or maintain relationships with customers and suppliers, including any inability to meet individual customer specifications;

●

diminished access to water;

●

work stoppages or similar difficulties, breakdown in labor relations, or a shortage of skilled technicians and engineers;

●

failure to retain key personnel or attract additional qualified personnel;

●

failure to comply with certain agreements with government entities that have provided us with certain incentives and favorable financing;

●

inability to access debt or equity capital when necessary or advisable;

●

impacts of force majeure events;

●

failure to develop and maintain relationships with local communities and stakeholders;

●

extensive and costly environmental requirements;

●

the need to obtain and sustain governmental permits and approvals;

●

failure to comply with applicable anti-corruption, anti-bribery, anti-money laundering and similar laws and regulations;

●

costs of compliance with environmental, health and safety regulations;

●

the impacts of climate change;

●

possible litigation risks, including permit disputes (including in respect of access and/or validity of tenure), environmental claims, occupational health and safety claims and employee claims;

●

any infringement of the intellectual property rights of third parties;

●

failure to adequately protect intellectual property rights;

●

issues with information technology systems, including cyber threats, disruption, damage and failure; and

●

use of resources and management attention related to the requirements of being a public company in the United States.

iii

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

USA Rare Earth, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except par value)

	As of
	March 31,			December 31,
	2025			2024
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	23,351		$	16,761
Deferred offering costs		-			5,134
Prepaid expenses and other current assets		2,428			378
Total current assets		25,779			22,273
Non-current assets:
Property, plant and equipment, net		30,122			26,529
Mineral interests, at cost		17,125			17,125
Equipment deposits		3,572			3,060
Lease right-of-use assets		425			30
Other non-current assets		52			52
Total non-current assets		51,296			46,796
Total assets	$	77,075		$	69,069
LIABILITIES, MEZZANINE AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	3,113		$	1,823
Accrued liabilities		3,831			3,071
Derivative liability, current		-			1,164
Notes payable, current		-			831
Finance lease liability, current		247			-
Operating lease liability, current		129			23
Other current liabilities		13			13
Total current liabilities		7,333			6,925
Deferred grants		8,200			8,200
Finance lease liability, non-current		805			-
Operating lease liability, non-current		289			-
Earnout liability		46,232			-
Warrant liability		34,475			-
Total liabilities		97,334			15,125
Commitments and contingencies (Note 8)
Mezzanine equity:
12% Series A Cumulative Convertible Preferred Stock subject to possible redemption, $0.0001 par value, 15,000 authorized, 5,233 issued and outstanding as of March 31, 2025		32,397			21,173
Subscription receivable		-			(1,250	)
Total mezzanine equity		32,397			19,923
Stockholders’ (deficit) equity:
Common Stock $0.0001, par value, 750,000 authorized; 81,952 shares issued and outstanding as of March 31, 2025		8			6
Subscription receivable		(17,187	)		-
Additional paid-in-capital		24			104,244
Accumulated deficit		(37,994	)		(72,872	)
Non-controlling interest		2,493			2,643
Total stockholders’ (deficit) equity		(52,656	)		34,021
Total liabilities, mezzanine and stockholders’ (deficit) equity	$	77,075		$	69,069

The accompanying notes are an integral part of these condensed consolidated financial statements.

USA Rare Earth, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

	For the Three Months Ended March 31,
	2025			2024
Operating costs and expenses
Selling, general and administrative	$	7,029		$	2,647
Research and development		1,689			2,051
Total operating costs and expenses		8,718			4,698
Operating loss		(8,718	)		(4,698	)
Other income (expense)
Interest and dividend income		187			109
Gain on fair market value of financial instruments		60,300			1
Interest and other expense		(87	)		(84	)
Total other income		60,400			26
Net income (loss)		51,682			(4,672	)
Net income (loss) attributable to non-controlling interest		(150	)		(200	)
Net income (loss) attributable to common stockholders	$	51,832		$	(4,472	)
Net income (loss) per common share - basic	$	0.75		$	(0.11	)
Net income (loss) per common share - diluted	$	0.58		$	(0.11	)
Weighted average shares outstanding - basic		64,463			59,425
Weighted average shares outstanding - diluted		83,079			59,425

The accompanying notes are an integral part of these condensed consolidated financial statements.

USA Rare Earth, Inc.

Condensed Consolidated Statements of Mezzanine Equity and

Stockholders’ Equity

(in thousands)

(Unaudited)

	Mezzanine Equity											Stockholders’ (Deficit) Equity
	Preferred Stock					Subscription			Total Mezzanine			Common Stock				Additional Paid-In-			Subscription			Accumulated			Non- controlling			Total Stockholders’ (Deficit)
	Shares		Amount			Receivable			Equity			Shares		Amount		Capital			Receivable			Deficit			Interest			Equity
Balance as of January 1, 2025 as recast*		2,739	$	21,173		$	(1,250	)	$	19,923			60,091	$	6	$	104,244		$	-		$	(72,872	)	$	2,643		$	34,021
Equity-based compensation - incentive units		-		-			-			-			-		-		241			-			-			-			241
Issuance of common stock - transaction bonus		-		-			-			-			78		-		841			-			-			-			841
Extinguishment of note payable		-		-			-			-			140		-		1,506			-			-			-			1,506
Convertible Preferred dividends (Class A and C)		84		1,082			-			1,082			182		-		(1,082	)		-			-			-			(1,082	)
Issuance of preferred stock and warrants, net of issuance costs		2,279		11,745			-			11,745			-		-		5,367			-									5,367
Forgiveness of related party promissory note		131		1,527			1,250			2,777			-		-		-			-			-			-			-
Deferred offering costs		-		(3,237	)		-			(3,237	)		-		-		(4,234	)		-			-			-			(4,234	)
Deemed dividend - preferred accretion to redemption value		-		107			-			107			-		-		(107	)		-			-			-			(107	)
Issuance of Common Stock in reverse recapitalization merger		-		-			-			-			21,461		2		27,718			-			(16,954	)		-			10,766
Earnout liability at Closing of the Merger		-		-			-			-			-		-		(99,639	)		-			-			-			(99,639	)
Conversion of Series A Investor Warrants into liability-classified warrants		-		-			-			-			-		-		(34,612	)		-			-			-			(34,612	)
Forward purchase agreements prepayment		-		-			-			-			-		-		(351	)		(20,389	)		-			-			(20,740	)
Early terminations of forward purchase agreements		-		-			-			-			-		-		63			3,271			-			-			3,334
Accretion of forward purchase agreements													-		-		69			(69	)		-			-			-
Net loss		-		-			-			-			-		-		-			-			51,832			(150	)		51,682
Balance as of March 31, 2025		5,233		32,397			-			32,397			81,952	$	8	$	24		$	(17,187	)	$	(37,994	)	$	2,493		$	(52,656	)

*	The shares of the Company’s common stock prior to the Merger have been retrospectively recast to reflect the change in the capital structure as a result of the Merger as described in Note 3.

	Common Stock				Class A Common						Class B Common						Class C Convertible Preferred						Class C-1 Convertible Preferred						Additional Paid-		Accumulated			Non- controlling			Total Stockholders’
	Shares		Amount		Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount			In-Capital		Deficit			Interest			Equity

Balance as of January 1, 2024 as previously reported		-	$	-		206,520		$	3,704			20,779		$	3,189			54,592		$	73,079			7,861		$	13,404		$	-	$	(54,223	)	$	3,331		$	42,484
Retroactive application of recapitalization		59,213		6		(206,520	)		(3,704	)		(20,779	)		(3,189	)		(54,592	)		(73,079	)		(7,861	)		(13,404	)		93,370		-			-			-
Balance as of January 1, 2024 as adjusted*		59,213		6		-			-			-			-			-			-			-			-			93,370		(54,223	)		3,331			42,484
Equity-based compensation		-		-		-			-			-			-			-			-			-			-			349		-			-			349
Class C and C-1 Convertible Preferred dividends		212		-		-			-			-			-			-			-			-			-			-		-			-			-
Issuance of warrants		-		-		-			-			-			-			-			-			-			-			614		-			-			614
Dilution of non-controlling interest		-		-		-			-			-			-			-			-			-			-			-		12			(12	)		-
Net loss		-		-		-			-			-			-			-			-			-			-			-		(4,472	)		(200	)		(4,672	)
Balance as of March 31, 2024		59,425	$	6		-		$	-			-		$	-			-		$	-			-		$	-			94,333	$	(58,683	)	$	3,119		$	38,775

The shares of the Company’s common stock prior to the Merger have been retrospectively recast to reflect the change in the capital structure as a result of the Merger as described in Note 3.

The accompanying notes are an integral part of these condensed consolidated financial statements.

USA Rare Earth, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2025			2024
Cash Flows From Operating Activities:
Net income (loss)	$	51,682		$	(4,672	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Equity-based compensation		1,282			349
Depreciation and amortization		33			90
Non-cash interest expense		73			44
Amortization of right-of-use assets		32			78
Loss on sale of property and equipment		-			39
Loss on Hatch note extinguishment		11			-
Gain on fair market value of financial instruments		(60,300	)		(1	)
Changes in assets and liabilities:
Prepaid and other current assets		(1,350	)		(262	)
Accounts payable		(1,609	)		800
Accrued and other current liabilities		(152	)		(662	)
Operating lease liabilities		(31	)		(61	)
Other liabilities		-			25
Net cash used in operating activities		(10,329	)		(4,233	)
Cash Flows From Investing Activities:
Purchase of property, plant and equipment		(2,011	)		(39	)
Equipment deposits		(1,039	)		(980	)
Cash used in investing activities		(3,050	)		(1,019	)
Cash Flows From Financing Activities:
Proceeds from issuance of series A-2 preferred and warrants		15,250			-
Proceeds from issuance of series A preferred and warrants		8,000			-
Issuance cost for series A preferred and warrants		(400	)		-
IPXX contribution of capital through merger		22,867			-
Prepayment of forward purchase agreements		(20,789	)		-
Proceeds from early termination of forward purchase agreements		3,322			-
Payment of issuance costs of Class C-1 Convertible Preferred units		-			(367	)
Payment of securities issuance costs		(8,281	)		(38	)
Net cash provided by (used in) financing activities		19,969			(405	)
Net increase (decrease) in cash		6,590			(5,657	)
Cash and cash equivalents, Beginning of Year		16,761			13,199
Cash and cash equivalents, End of Period	$	23,351		$	7,542

Supplemental Disclosure of Noncash Investing and Financing Activities:
Class C and C-1 convertible preferred stock dividends	$	1,960		$	1,792
Class A-1 and A-2 convertible preferred stock dividends	$	1,082		$	-
Finance right-out-use assets obtained in exchange for finance lease liabilities	$	1,233		$	-
Operating right-of-use assets obtained in exchange for operating lease liabilities	$	427		$	-

The accompanying notes are an integral part of these condensed consolidated financial statements.

USA Rare Earth, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1. ORGANIZATION

The mission of USA Rare Earth, Inc. (formerly known as Inflection Point Acquisition Corp. II or “IPXX”), collectively with its subsidiaries (the “Company,” or “USAR”) is to establish a domestic rare earth magnet supply chain that supports the future state of energy, mobility, technology and national security in the United States (“U.S.”). USAR is developing a rare earth sintered neo magnet (“neo magnet” or “NdFeB”) manufacturing plant in Stillwater, Oklahoma, and intends to establish domestic rare earth and critical minerals supply, extraction, and processing capabilities to both supply its magnet manufacturing plant and market surplus materials to third parties. Rare earth magnets are critical to various business sectors and industries, including the defense, automotive, aviation, industrial, AI Robotics, medical, and consumer electronics industries, among others. USAR is planning to take a broad approach to the industries it serves with the intention of providing high quality NdFeB magnets to a variety of industries and customers. USAR’s focus on developing domestic rare earth production aligns with national priorities, offering the potential of a sustainable and secure domestic supply of materials critical to key industries.

USAR was a special purpose acquisition company incorporated as a Cayman Islands exempted corporation on March 6, 2023. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. Following the closing of the Merger Transactions (as defined below), shares of USAR common stock (“Common Stock”) and USAR warrants began trading on Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “USAR” and “USARW”, respectively, on March 14, 2025.

These condensed consolidated financial statements refer to the mining operations of the Company, conducted through Round Top Mountain Development, LLC (“RTMD”), at Round Top Mountain in Texas (“Round Top”) and the Company’s research and development facility in Colorado as the “Round Top Project”. RTMD has mining rights in Texas and is developing processing technology for the rare earth minerals which are to be mined in Texas.

IPXX Business Combination Agreement

On August 21, 2024, IPXX entered into a Business Combination Agreement (as amended on November 12, 2024 and January 30, 2025, the “Business Combination Agreement”), by and among IPXX, USA Rare Earth, LLC, a Delaware limited liability company (“USARE LLC”), and IPXX Merger Sub, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of IPXX (“Merger Sub”). Pursuant to the Business Combination Agreement, Merger Sub merged with and into the USARE LLC, with the USARE LLC continuing as the surviving company (the “Merger”).

On March 12, 2025, as contemplated by the Business Combination Agreement, IPXX filed a notice of deregistration with the Cayman Islands Registrar of Companies and filed a certificate of incorporation and certificate of corporate domestication with the Delaware Secretary of State, pursuant to which IPXX was domesticated and continues as a Delaware corporation, changing its name to USA Rare Earth, Inc (the “Domestication”). As a result of the Domestication, each issued and outstanding Class A ordinary share of IPXX automatically converted, on a one-for-one basis, into a share of Common Stock and each of the issued and outstanding warrants to purchase Class A ordinary shares of IPXX automatically became a warrant exercisable for one share of Common Stock on the same terms as the pre-Domestication warrants. Additionally, each unit of IPXX issued and outstanding as of immediately prior to the Domestication was automatically canceled and each unit holder received one share of Common Stock and one-half of one USAR warrant exercisable for one share of Common Stock on the same terms as the pre-Domestication warrants.

On March 13, 2025 (the “Closing Date” or “Closing”), USAR consummated the previously announced Merger and related transactions (the “Merger Transactions”) contemplated by the Business Combination Agreement and USARE LLC became a direct wholly owned subsidiary of USAR. As a result of the Merger Transactions, all issued and outstanding Class A and B common units, Class C and C-1 preferred units, equity-based incentive units and warrants to acquire Class B common units and Class C preferred units of USARE LLC were converted into shares of Common Stock using an exchange ratio of approximately 0.204. On the Closing Date all incentive units were considered fully vested. The number of shares of Common Stock issuable for USARE LLC warrants and incentive units was calculated using the treasury method of accounting on a cashless exercise basis. Additionally, all issued and outstanding Class A-1 and A-2 preferred units of USARE LLC were converted on a one-for-one basis into shares of USAR Series A Preferred stock. Warrants to acquire USAR Class A common stock issued to the holders of Preferred Class A-1 and A-2 units were converted into a right to acquire Common Stock on a one-for-one basis.

As a result of the Merger, USAR is a holding company, in which substantially all of the assets and business are held by USARE LLC and its subsidiaries and continues to operate through USARE LLC and its subsidiaries. The Merger is accounted for as a reverse recapitalization in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and not as a business combination. Under this method of accounting, IPXX is treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Merger will be treated as the equivalent of USARE LLC issuing stock for the net assets of IPXX, accompanied by a recapitalization. USARE LLC has been determined to be the accounting predecessor to the combined entity.

Unless otherwise noted or the context otherwise requires, references to the “Company,” “USAR,” “USA Rare Earth, Inc.,” refer to the business of USARE LLC and its subsidiaries prior to the Closing and to the business of USAR and its subsidiaries, including USARE LLC, following the Closing.

See additional information in Note 3, “Merger Transaction”.

Going Concern

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The Company has generated no revenues since inception, continues to incur losses from operations, and has an accumulated deficit. For the three months ended March 31, 2025, the Company had net income of $51.7 million, which includes a non-cash fair value gain on financial instruments of $60.3 million. For the three months ended March 31, 2024, the Company had a net loss of $4.7 million. For the three months ended March 31, 2025 and 2024, the Company used $10.3 million and $4.2 million cash in operating activities, respectively.

Subsequent to March 31, 2025, the Company received additional cash proceeds of $11.5 million upon early terminations of the Forward Purchase Agreements (“FPA”). In addition, on May 5, 2025, the Company announced the closing of a private investment in public equity (“PIPE”) financing for $75.0 million with a single institutional investor.

Although, as of March 31, 2025, the Company had cash on its condensed consolidated balance sheet of $23.4 million, and has subsequently raised additional proceeds from the early terminations of the FPA and financing from the PIPE, the Company will need to raise additional capital to implement its strategic plan.

Based on the Company’s need to raise additional capital as well as milestones required for its current strategic plan to generate sustainable commercial revenues, there is substantial doubt regarding its ability to continue as a going concern for the twelve months following the issuance of these condensed consolidated financial statements.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2025 and December 31, 2024 and the results of operations and cash flows for the three months ended March 31, 2025 and 2024. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period. The December 31, 2024 balances reported herein are derived from the audited consolidated financial statements of USARE LLC.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of USARE LLC as of and for the years ended December 31, 2024 and 2023 contained in a Form 8-K dated and filed with the SEC on March 19, 2025.

These financial statements have been prepared on a basis that assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

Emerging Growth Company Status

The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act, as defined, provides emerging growth companies with certain exemptions from public company reporting requirements for up to five fiscal years while a company remains an emerging growth company. As part of these exemptions, the Company need only provide two fiscal years of audited financial statements instead of three, it has reduced disclosure obligations such as for executive compensation, and it is not required to comply with auditor attestation requirements from Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, regarding its internal control over financial reporting. Additionally, the JOBS Act has allowed the Company the option to delay adoption of new or revised financial accounting standards until private companies are required to comply with new or revised financial accounting standards.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company, as well as its wholly-owned subsidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The amounts that involve significant estimates include equity-based compensation, asset and liability valuations, certain equity issuances, and other fair value estimates reported. The assumptions used in calculating fair value represent the Company’s best estimates. However, these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change or the Company uses different assumptions, any gain or loss recognized using estimates could be materially different.

Cash and Cash Equivalents

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company considers cash equivalents to be highly liquid investments, including U.S. treasury and agency securities purchased with original maturities of three months or less. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). Management considers the risk of loss to be minimal.

Cash and cash equivalents consist of cash and liquid investments with an original maturity of three months or less. At March 31, 2025 and December 31, 2024, cash and cash equivalents consisted of $23.4 million and $16.8 million, respectively, of funds held in bank and investment accounts with financial institutions in the U.S.

The Company continually monitors its cash positions with the financial institutions through which it invests. The Company maintains balances in various U.S. financial institutions in excess of U.S. federally insured limits.

SEC Form 10-Q filed by USA Rare Earth Inc.