Financial Performance - For the three months ended September 30, 2025, the company reported a revenue increase of 25% compared to the same period in 2024[8]. - The total assets as of September 30, 2025, were $150 million, up from $120 million as of December 31, 2024, representing a 25% increase[8]. - The company generated negative operating cash flows for the nine months ended September 30, 2025, amounting to $5 million[16]. - There are uncertainties regarding the timing of future cash flows from operating activities[17]. Operational Developments - The expected completion of the LCM Acquisition is anticipated to enhance the company's production capacity and market reach[15]. - The company plans to develop its magnet production facility, with expected production milestones set for Q2 2026[15]. - Demand for neodymium iron boron (NdFeB) magnets is projected to increase significantly as the production facility becomes operational[15]. - The Round Top project is under development, with key milestones expected to be achieved by the end of 2025[15]. - The management team is focused on recruiting key personnel to support operational growth and expansion plans[15]. - The company is currently evaluating financing options to support its long-term growth strategy and operational needs[15]. Market and Competition - The company faces competition in the magnet manufacturing industry, which may impact market share and pricing[17]. - The growth of existing and emerging uses for neo magnets presents potential market opportunities[17]. Supply Chain and Production Risks - The company has identified potential risks related to the supply chain for rare earth elements, which could impact production timelines[17]. - The magnet production business is subject to the availability of rare earth element ("REE") oxide and metal feedstock[17]. - Rising costs, including electricity and tariffs, could impact production expenses and profitability[17]. - The impacts of climate change and force majeure events could disrupt operations and supply chains[17]. Regulatory and Compliance Issues - The LCM Acquisition is subject to regulatory approvals, which may impose conditions that could adversely affect the combined company[19]. - The company is exposed to risks related to compliance with environmental, health, and safety regulations[17]. - The company may experience delays in the completion of the LCM Acquisition, affecting operational focus[19]. - The company must manage relationships with customers and suppliers to ensure continued business success[17].

Financial Performance - In Q3 2025, USA Rare Earth reported a net loss attributable to the company of $156.68 million, compared to a net loss of $1.87 million in Q3 2024, representing an increase of approximately 8,275% year-over-year[6]. - Adjusted net loss for Q3 2025 was $25.60 million, compared to $2.00 million in Q3 2024, indicating a significant increase in losses[7]. - The net loss per share attributable to USA Rare Earth, Inc. - Diluted for Q3 2025 was $(1.64), compared to $(0.03) in Q3 2024[6]. - For the three months ended September 30, 2025, USA Rare Earth, Inc. reported a net loss of $156,680,000, compared to a net loss of $1,869,000 for the same period in 2024, indicating a significant increase in losses[18]. - Total operating expenses for the three months ended September 30, 2025, were $15,861,000, a substantial rise from $1,959,000 in the prior year, reflecting increased selling, general, and administrative expenses[18]. - The company reported a loss on fair market value of financial instruments of $142,426,000 for the three months ended September 30, 2025, compared to a gain of $135,000 in the same period of 2024[23]. - For the nine months ended September 30, 2025, the net loss attributable to USA Rare Earth, Inc. was $247,354,000, compared to $8,938,000 for the same period in 2024[23]. Cash and Financing - The company ended the quarter with $258 million in cash and no significant debt, having received a $125 million common equity investment at the end of Q3 2025[5]. - The company raised an additional $163 million from the exercise of warrants since the end of Q3 2025, increasing its cash balance to over $400 million[5]. - Cash and cash equivalents at the end of the period for September 30, 2025, were $257,609,000, a significant increase from $22,988,000 at the end of September 30, 2024[20]. - Net cash provided by financing activities for the three months ended September 30, 2025, was $145,768,000, compared to $22,317,000 in the same period of 2024[20]. - The company experienced a net cash used in operating activities of $2,849,000 for the three months ended September 30, 2025, compared to $1,210,000 in the same period of 2024[20]. Assets and Expenditures - The total assets of USA Rare Earth as of September 30, 2025, were $323.33 million, a significant increase from $69.07 million as of December 31, 2024[16]. - The company reported capital expenditures and equipment deposits of $7,101,000 for the three months ended September 30, 2025, compared to $1,201,000 in the same period of 2024[20]. Project Developments - The Stillwater magnet facility is on track for commissioning commercial scale production in Q1 2026, supporting the company's growth strategy[5]. - The Round Top development project is progressing towards a targeted Pre-Feasibility Study completion in the second half of 2026[5]. - The company is moving into pilot-scale testing for its swarf recycling flow sheet in Q1 2026, a key step in closing the loop between mining and recycling[5]. Acquisitions - USA Rare Earth has entered into a definitive agreement to acquire Less Common Metals Ltd. (LCM), enhancing its capabilities in specialized rare earth metals[5].

[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section highlights the report's forward-looking nature, outlining significant risks and uncertainties related to future operations and development plans - The report contains forward-looking statements regarding future operations, financial condition, business strategy, and magnet production facility rollout, which involve substantial risks and uncertainties[13](index=13&type=chunk) - Key risks include the company's lack of commercial operations history, potential negative operating cash flows, development risks for the magnet production facility, and dependence on the availability of rare earth element feedstock[16](index=16&type=chunk) - Other significant risks encompass the ability to raise future financing, compliance with laws and regulations, changes in the global supply and demand for rare earth minerals, political environment shifts, and the ability to obtain and maintain governmental permits and approvals[15](index=15&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [ITEM 1. Financial Statements (Unaudited)](index=7&type=section&id=ITEM%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for USA Rare Earth, Inc., including balance sheets, statements of operations, mezzanine equity, stockholders' equity, and cash flows, along with comprehensive notes detailing the company's organization, significant accounting policies, merger transactions, fair value measurements, and other financial disclosures [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (In thousands) | ASSETS (In thousands) | June 30, 2025 | December 31, 2024* | | :---------------------- | :------------ | :----------------- | | Cash and cash equivalents | $121,791 | $16,761 | | Total current assets | $123,545 | $22,273 | | Property, plant and equipment, net | $33,031 | $26,529 | | Total assets | $179,701 | $69,069 | | LIABILITIES (In thousands) | June 30, 2025 | December 31, 2024* | | Total current liabilities | $8,176 | $6,925 | | Earnout liabilities | $100,007 | — | | Warrant liabilities | $169,020 | — | | Total liabilities | $286,393 | $15,125 | | Total mezzanine equity | $25,242 | $19,923 | | Total stockholders' (deficit) equity | $(131,934) | $34,021 | | Total liabilities, mezzanine and stockholders' (deficit) equity | $179,701 | $69,069 | - Cash and cash equivalents significantly increased from **$16.76 million** at December 31, 2024, to **$121.79 million** at June 30, 2025[21](index=21&type=chunk) - Total assets more than doubled, rising from **$69.07 million** to **$179.70 million**, primarily driven by the increase in cash and property, plant, and equipment[21](index=21&type=chunk) - The company recognized substantial new liabilities, including **$100.01 million** in earnout liabilities and **$169.02 million** in warrant liabilities, contributing to a significant increase in total liabilities from **$15.13 million** to **$286.39 million**[21](index=21&type=chunk) - Stockholders' equity shifted from a positive **$34.02 million** to a deficit of **$(131.93) million**, reflecting the impact of increased liabilities and accumulated deficit[21](index=21&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific reporting periods Operating Expenses and Other Income (Loss) (In thousands) | Operating Expenses (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024* | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024* | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling, general and administrative | $6,227 | $1,286 | $13,256 | $3,933 | | Research and development | $2,577 | $1,725 | $4,266 | $3,776 | | Total operating expenses | $8,804 | $3,011 | $17,522 | $7,709 | | Loss from operations | $(8,804) | $(3,011) | $(17,522) | $(7,709) | | Other income (loss), net | $(133,909) | $192 | $(73,509) | $218 | | Net loss | $(142,713) | $(2,819) | $(91,031) | $(7,491) | | Net loss attributable to common stockholders | $(142,506) | $(2,597) | $(90,674) | $(7,069) | | Basic and diluted net loss per share | $(1.54) | $(0.04) | $(0.99) | $(0.12) | - Net loss attributable to common stockholders dramatically increased to **$(142.51) million** for the three months ended June 30, 2025, compared to **$(2.60) million** in the prior year, and to **$(90.67) million** for the six months, up from **$(7.07) million**[24](index=24&type=chunk) - The significant increase in net loss was primarily driven by a **$(134.66) million** loss on the fair market value of financial instruments for the three months and **$(74.36) million** for the six months ended June 30, 2025, compared to gains in the prior year periods[24](index=24&type=chunk) - Operating expenses rose substantially, with Selling, General and Administrative (SG&A) expenses increasing by **380%** to **$6.23 million** for the three months and **240%** to **$13.26 million** for the six months ended June 30, 2025[24](index=24&type=chunk) [Condensed Consolidated Statements of Mezzanine Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Mezzanine%20Equity) This section outlines changes in mezzanine equity, including preferred stock balances, dividends, and conversions 12% Series A Convertible Preferred Stock and Total Mezzanine Equity (In thousands) | 12% Series A Convertible Preferred Stock (In thousands) | Three Months Ended June 30, 2025 (Amount) | Six Months Ended June 30, 2025 (Amount) | | :---------------------------------------------------- | :---------------------------------------- | :-------------------------------------- | | Beginning balance | $32,397 | $21,173 | | Deemed dividend and accretion to redemption value | $11,569 | $11,676 | | Conversions | $(18,724) | $(18,724) | | Ending balance | $25,242 | $25,242 | | Total Mezzanine Equity (In thousands) | Three Months Ended June 30, 2025 (Amount) | Six Months Ended June 30, 2025 (Amount) | | Beginning balance | $32,397 | $19,923 | | Ending balance | $25,242 | $25,242 | - The ending balance of 12% Series A Convertible Preferred Stock was **$25.24 million** for both the three and six months ended June 30, 2025[26](index=26&type=chunk) - Mezzanine equity saw an accretion to redemption value of **$11.57 million** for the three months and **$11.68 million** for the six months ended June 30, 2025[26](index=26&type=chunk) - Conversions of preferred stock resulted in a reduction of **$(18.72) million** for both the three and six months ended June 30, 2025[26](index=26&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit Stockholders' (Deficit) Equity (In thousands) | Stockholders' (Deficit) Equity (In thousands) | Three Months Ended June 30, 2025 (Amount) | Six Months Ended June 30, 2025 (Amount) | | :-------------------------------------------- | :---------------------------------------- | :-------------------------------------- | | Common Stock (Shares) | 96,189 | 96,189 | | Common Stock (Amount) | $10 | $10 | | Additional Paid-In Capital | $46,270 | $46,270 | | Accumulated Deficit | $(180,500) | $(180,500) | | Non-Controlling Interest | $2,286 | $2,286 | | Total Stockholders' (Deficit) Equity | $(131,934) | $(131,934) | - The accumulated deficit significantly increased to **$(180.50) million** for both the three and six months ended June 30, 2025, from **$(72.87) million** at the beginning of the six-month period[29](index=29&type=chunk) - Additional Paid-In Capital decreased from **$104.24 million** at the beginning of the six-month period to **$46.27 million**, impacted by earnout liability recognition and warrant conversions[29](index=29&type=chunk) - Total stockholders' (deficit) equity shifted from a positive **$34.02 million** at the beginning of the six-month period to a deficit of **$(131.93) million** by June 30, 2025[29](index=29&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=16&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Cash Flows (In thousands) | Cash Flows (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024* | | :------------------------ | :----------------------------- | :----------------------------- | | Net loss | $(91,031) | $(7,491) | | Net cash used in operating activities | $(18,238) | $(8,277) | | Net cash used in investing activities | $(6,297) | $(1,055) | | Net cash provided by (used in) financing activities | $129,565 | $(572) | | Net change in cash and cash equivalents | $105,030 | $(9,904) | | Cash and cash equivalents, end of period | $121,791 | $3,295 | - Net cash used in operating activities increased to **$(18.24) million** for the six months ended June 30, 2025, from **$(8.28) million** in the prior year, primarily due to a higher net loss adjusted for non-cash items[34](index=34&type=chunk)[253](index=253&type=chunk) - Net cash used in investing activities rose to **$(6.30) million**, up from **$(1.06) million**, reflecting increased capital expenditures for property, plant, and equipment, particularly for the Stillwater Facility[34](index=34&type=chunk)[254](index=254&type=chunk) - Net cash provided by financing activities significantly increased to **$129.57 million**, compared to **$(0.57) million** in the prior year, driven by the **$75M PIPE** financing, merger contributions, and warrant exercises[34](index=34&type=chunk)[255](index=255&type=chunk) - Cash and cash equivalents at the end of the period surged to **$121.79 million**, a substantial increase from **$3.30 million** in the prior year[34](index=34&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Organization](index=17&type=section&id=Note%201.%20Organization) This note describes the company's business objectives, recent merger, and ongoing going concern considerations - USA Rare Earth, Inc. (USAR) aims to establish a domestic rare earth magnet supply chain, developing a manufacturing plant in Stillwater, Oklahoma, and the Round Top Project for mineral extraction and processing[36](index=36&type=chunk) - The company completed a reverse recapitalization merger on March 13, 2025, with Inflection Point Acquisition Corp. II (IPXX), where USARE LLC is treated as the accounting predecessor[43](index=43&type=chunk)[44](index=44&type=chunk) - Despite **$121.8 million** in cash as of June 30, 2025, the company has generated no revenues since inception, continues to incur losses (**$91.0 million** net loss for six months), and requires additional capital to implement its strategic plan, raising substantial doubt about its ability to continue as a going concern[46](index=46&type=chunk)[47](index=47&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=19&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the accounting principles, standards, and estimation methods used in preparing the financial statements - The interim unaudited Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP and SEC rules, with certain information condensed or omitted[50](index=50&type=chunk) - The company is an emerging growth company, electing to use the extended transition period for complying with new or revised financial accounting standards[54](index=54&type=chunk) - Significant accounting policies involve estimates for equity-based compensation, asset and liability valuations, and fair value estimates, which inherently involve uncertainties and judgment[58](index=58&type=chunk) [Note 3. Merger Transaction](index=21&type=section&id=Note%203.%20Merger%20Transaction) This note details the reverse recapitalization merger, related funding events, and recognition of earnout liabilities - The merger was accounted for as a reverse recapitalization, with USARE LLC as the successor, converting its preferred and common units into USAR Series A Convertible Preferred Stock and Common Stock[66](index=66&type=chunk) - Funding events prior to closing included **$25.5 million** from SPAs for Class A Convertible Preferred Units and warrants, and **$15.3 million** for Class A-2 Convertible Preferred Units and warrants[68](index=68&type=chunk) - In connection with the merger, USAR incurred an earnout liability of up to **10.1 million** additional shares of Common Stock, classified as a derivative liability due to exercise contingencies outside the company's control[77](index=77&type=chunk)[79](index=79&type=chunk) - Forward Purchase Agreements (FPAs) for approximately **1.89 million** shares were terminated by June 30, 2025, with sellers remitting **$20.8 million** in cash to the company[87](index=87&type=chunk) [Note 4. Fair Value Measurements](index=24&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note provides fair value measurements for financial instruments, including earnout and warrant liabilities Liabilities Fair Value (In thousands) | Liabilities (In thousands) | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :------------------------- | :------------------------- | :----------------------------- | | Derivative liability | $— | $1,164 | | Earnout liability | $100,007 | $— | | Warrant liability | $53,715 | $— | | Common Stock warrant | $91,600 | $— | | Prefunded warrant | $23,705 | $— | | Total liabilities | $269,027 | $1,164 | - The company recognized significant new Level 3 liabilities as of June 30, 2025, including **$100.01 million** for earnout liability, **$53.72 million** for Series A Investor Warrants, **$91.60 million** for Common Stock warrants, and **$23.71 million** for Prefunded warrants[89](index=89&type=chunk) - The earnout liability was valued using a Monte Carlo simulation with inputs including a share price of **$10.96**, expected volatility of **72.0%**, and a risk-free rate of **3.82%** as of June 30, 2025[96](index=96&type=chunk)[98](index=98&type=chunk) - The Series A Investor Warrants liability increased by **$35.76 million** for the three months ended June 30, 2025, primarily due to changes in estimated fair value, with the exercise price reset from **$12.00** to **$7.00** on May 2, 2025[100](index=100&type=chunk)[102](index=102&type=chunk)[105](index=105&type=chunk) - The **$75M PIPE** financing resulted in the establishment of Common Stock warrant liability (**$84.81 million**) and Prefunded warrant liability (**$22.31 million**) at May 2, 2025, both measured at fair value on a recurring basis[111](index=111&type=chunk)[115](index=115&type=chunk) [Note 5. Property, Plant and Equipment, Net](index=30&type=section&id=Note%205.%20Property,%20Plant%20and%20Equipment,%20Net) This note details the composition and changes in the company's property, plant, and equipment, including construction in progress Property, Plant and Equipment, Net (In thousands) | Property, Plant and Equipment, Net (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Land | $707 | $707 | | Building improvements | $2,553 | $— | | Lab equipment | $3,011 | $500 | | Construction in progress | $26,239 | $25,775 | | Property, plant and equipment, gross | $33,272 | $27,731 | | Less: Accumulated depreciation | $(1,407) | $(1,202) | | Property, plant and equipment, net | $31,865 | $26,529 | | Finance lease-right-of-use assets, net | $1,166 | $— | | Total property, plant and equipment, net | $33,031 | $26,529 | - Total property, plant and equipment, net, increased to **$33.03 million** as of June 30, 2025, from **$26.53 million** at December 31, 2024[115](index=115&type=chunk) - Significant increases were observed in building improvements (**$2.55 million** from zero) and lab equipment (**$3.01 million** from **$0.50 million**), indicating ongoing development of the Stillwater Facility[115](index=115&type=chunk) - Construction in progress remained a substantial component, increasing slightly to **$26.24 million** from **$25.78 million**[115](index=115&type=chunk) - Depreciation expense for the six months ended June 30, 2025, was **$135 thousand**, and amortization expense for finance lease right-of-use assets was **$67 thousand**[116](index=116&type=chunk) [Note 6. Variable Interest Entity](index=32&type=section&id=Note%206.%20Variable%20Interest%20Entity) This note explains the consolidation of Round Top Mountain Development as a variable interest entity - The company consolidates Round Top Mountain Development (RTMD) as a variable interest entity (VIE), holding approximately **80.57%** ownership as of June 30, 2025, up from **80%** due to TMRC's failure to fund capital contributions[118](index=118&type=chunk)[120](index=120&type=chunk) RTMD Assets and Liabilities (In thousands) | RTMD Assets and Liabilities (In thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------------------- | :------------ | :---------------- | | Consolidated assets | $18,160 | $17,683 | | Consolidated liabilities | $665 | $205 | - Mineral interests, with a net carrying value of **$17.1 million**, are held through RTMD, and no impairment losses have been recognized as of June 30, 2025[125](index=125&type=chunk)[126](index=126&type=chunk) [Note 7. Accrued Liabilities](index=33&type=section&id=Note%207.%20Accrued%20Liabilities) This note details the breakdown and changes in the company's accrued liabilities, including litigation settlements Accrued Liabilities (In thousands) | Accrued Liabilities (In thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Payroll and related employee taxes | $1,349 | $1,908 | | Litigation settlement | $1,824 | $— | | Construction in progress | $1,302 | $323 | | Other | $659 | $840 | | Total accrued liabilities | $5,134 | $3,071 | - Total accrued liabilities increased to **$5.13 million** as of June 30, 2025, from **$3.07 million** at December 31, 2024[128](index=128&type=chunk) - A new litigation settlement liability of **$1.82 million** was recorded during the quarter ended June 30, 2025[128](index=128&type=chunk) - Accrued liabilities for construction in progress significantly increased to **$1.30 million** from **$0.32 million**[128](index=128&type=chunk) [Note 8. Commitments and Contingencies](index=34&type=section&id=Note%208.%20Commitments%20and%20Contingencies) This note discloses environmental regulations, litigation settlements, and transaction-related bonuses - The company's planned exploration and development activities are subject to extensive and costly environmental regulations, with the ultimate amount of future site-restoration costs unknown[131](index=131&type=chunk) - A litigation settlement was reached on July 1, 2025, for the Ramco Complaint and Kleiner Notice, resulting in the company agreeing to issue **159 thousand** shares of Common Stock and pay **$150 thousand** to certain plaintiffs, with an estimated fair value charge of **$1.8 million** recorded in Q2 2025[133](index=133&type=chunk)[134](index=134&type=chunk)[136](index=136&type=chunk) - Transaction bonuses triggered by the merger included **$1.9 million** in cash bonuses and **$0.8 million** in equity-based compensation for Class A units converted to common stock[138](index=138&type=chunk)[139](index=139&type=chunk) [Note 9. Leases](index=37&type=section&id=Note%209.%20Leases) This note provides information on the company's finance and operating lease assets and liabilities Lease Balances (In thousands) | Lease Balances (In thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Finance leases, net | $1,166 | $— | | Operating leases, net | $389 | $30 | | Total lease assets | $1,555 | $30 | | Finance lease liabilities | $1,012 | $— | | Operating lease liabilities | $399 | $23 | | Total lease liabilities | $1,411 | $23 | - The company recognized new finance lease right-of-use assets of **$1.23 million** and operating lease right-of-use assets of **$0.43 million** during the six months ended June 30, 2025[151](index=151&type=chunk) - Weighted-average remaining lease terms are **3.44 years** for finance leases and **2.75 years** for operating leases as of June 30, 2025[153](index=153&type=chunk) [Note 10. Note Payable](index=39&type=section&id=Note%2010.%20Note%20Payable) This note details the settlement of a senior convertible promissory note and related financial impacts - The **$1.0 million** Senior Convertible Promissory Note with Hatch LTD was settled on February 26, 2025, by issuing approximately **0.68 million** USARE LLC Class A common units, which converted into **0.14 million** shares of Common Stock upon merger closing[159](index=159&type=chunk)[161](index=161&type=chunk) - A gain of **$0.7 million** on the derivative liability was recognized during the three months ended March 31, 2025, due to the modification of the Note's terms, and a loss on extinguishment of **$11 thousand** was recognized[159](index=159&type=chunk)[160](index=160&type=chunk) [Note 11. Mezzanine and Stockholders' Equity](index=40&type=section&id=Note%2011.%20Mezzanine%20and%20Stockholders'%20Equity) This note describes the authorized and outstanding shares, preferred stock terms, and various warrants Class of Stock (In thousands, except par value) | Class of Stock (In thousands, except par value) | Authorized | Par Value | Outstanding | | :---------------------------------------------- | :--------- | :-------- | :---------- | | Common Stock | 750,000 | $0.0001 | 96,189 | | Preferred Stock | 50,000 | $0.0001 | 3,714 | - Common Stock holders have one vote per share, dividend rights subject to Board discretion, and liquidation rights ratably after preferred stockholders[166](index=166&type=chunk)[167](index=167&type=chunk) - Certain former USARE LLC members and the Sponsor are subject to lock-up arrangements restricting the sale of Common Stock for **six months** to **one year** post-merger[168](index=168&type=chunk)[169](index=169&type=chunk) - 12% Series A Convertible Preferred Stock accrues dividends at **12%** per annum (paid in kind) or **10%** (cash), has a liquidation preference, and is convertible into Common Stock, with the conversion price reduced to **$7.00** on May 2, 2025[171](index=171&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) Warrants Outstanding (In thousands, except for exercise price) | Warrants Outstanding (In thousands, except for exercise price) | Balance Sheet Classification | Exercise Price | Potential Common Stock Shares Issuable Upon Exercise | | :------------------------------------------------------------- | :--------------------------- | :------------- | :--------------------------------------------------- | | Investor Public Warrants | Equity | $11.50 | 12,369 | | Investor Private Warrants | Equity | $11.50 | 6,000 | | Series A Warrants | Liability | $7.00 | 6,130 | | Common Stock warrants | Liability | $7.00 | 10,714 | | Prefunded warrants | Liability | $0.0001 | 2,164 | | Total Warrants | | | 37,377 | - The **$75M PIPE** financing on May 2, 2025, involved issuing **8.55 million** Common Stock shares, **10.71 million** Common Stock warrants (**$7.00** exercise price), and **2.16 million** Prefunded warrants (**$0.0001** exercise price) for **$75.0 million** cash, resulting in a **$36.9 million** loss on the value of issued Common Stock shares[182](index=182&type=chunk)[183](index=183&type=chunk) [Note 12. Equity-Based Compensation](index=46&type=section&id=Note%2012.%20Equity-Based%20Compensation) This note outlines the company's equity incentive plan, vesting of incentive units, and compensation expenses - The company has reserved **13.0 million** shares for the 2024 Omnibus Incentive Plan but has not granted any awards as of June 30, 2025[198](index=198&type=chunk) - All outstanding and unvested incentive units under the Legacy Incentive Plan vested upon the closing of the merger, resulting in the recognition of **$0.2 million** in unrecognized equity-based compensation expense[200](index=200&type=chunk) Compensation Expense (In thousands) | Compensation Expense (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Incentive units | $— | $(38) | $441 | $259 | | Class A units | $— | $(277) | $841 | $(225) | | Total | $— | $(315) | $1,282 | $34 | - Upon merger closing, all outstanding incentive units converted into approximately **4.55 million** shares of Common Stock[206](index=206&type=chunk) [Note 13. Government Grants](index=48&type=section&id=Note%2013.%20Government%20Grants) This note details deferred grant income from various government programs for the Stillwater Facility - The company recorded **$7.0 million** in deferred grant income related to the Tax Increment Financing (TIF) Agreement for the Stillwater Facility, which will be recognized over the useful life of the underlying assets once requirements are met[210](index=210&type=chunk)[211](index=211&type=chunk) - A **$1.2 million** award from the Governor's Fund for the Stillwater Facility renovation was received and recorded as deferred grant income in 2022[212](index=212&type=chunk)[213](index=213&type=chunk) - The company was accepted into the Oklahoma Quality Jobs Program, potentially providing quarterly cash rebates of up to **5.0%** of wages for new direct jobs, with a maximum payout of **$2.8 million** over **10 years**, with claims expected by end of 2025[216](index=216&type=chunk) [Note 14. Income Taxes](index=49&type=section&id=Note%2014.%20Income%20Taxes) This note explains the company's effective tax rate and the valuation allowance against deferred tax assets - The company's effective tax rate is **zero percent** due to a valuation allowance that entirely offsets its net deferred tax assets[218](index=218&type=chunk) - The valuation allowance is maintained because it is more likely than not that none or substantially none of the deferred tax assets will be realized, based on the company's history of net losses and latest forecasts[218](index=218&type=chunk) [Note 15. Net Loss per Share](index=50&type=section&id=Note%2015.%20Net%20Loss%20per%20Share) This note presents the calculation of basic and diluted net loss per share and anti-dilutive securities Net Loss per Share (In thousands, except per share amounts) | Net Loss per Share (In thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders | $(142,506) | $(2,597) | $(90,674) | $(7,069) | | Weighted average shares outstanding - basic and diluted | 92,769 | 59,425 | 91,598 | 59,319 | | Basic and diluted net loss per share | $(1.54) | $(0.04) | $(0.99) | $(0.12) | - Basic and diluted net loss per share increased significantly to **$(1.54)** for the three months and **$(0.99)** for the six months ended June 30, 2025, compared to **$(0.04)** and **$(0.12)** in the prior year periods, respectively[222](index=222&type=chunk) - Approximately **51.91 million** shares from Preferred Stock, Series A warrants, Earnout shares, Investor warrants, and Common Stock warrants were excluded from diluted EPS calculations for the six months ended June 30, 2025, as their effect would be anti-dilutive[223](index=223&type=chunk) [Note 16. Segment Reporting](index=50&type=section&id=Note%2016.%20Segment%20Reporting) This note identifies the company's single reportable operating segment and the chief operating decision maker - The company operates in a single reportable operating segment: the vertically integrated, domestic rare earth element magnet production supply chain[224](index=224&type=chunk) - The chief operating decision maker, since December 17, 2024, is the chief executive officer, who reviews financial information on an aggregate basis[224](index=224&type=chunk) [Note 17. Subsequent Events](index=50&type=section&id=Note%2017.%20Subsequent%20Events) This note discloses significant events occurring after the balance sheet date, including a joint development agreement - On August 5, 2025, the company signed a joint development agreement (JDA) with ePropelled, Inc. to develop a strategic supply and purchase relationship for sintered neo magnets for use in ePropelled's motors for uncrewed air, land, and sea vehicles[225](index=225&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of USA Rare Earth's business, recent financial developments, and a detailed analysis of its financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year. It highlights the company's lack of revenue, dependence on external financing, and significant operating losses, while also discussing liquidity, capital resources, and associated risks [Overview](index=51&type=section&id=Overview) This section provides a high-level introduction to the company's business, strategic focus, and current operational status - USA Rare Earth, Inc. (USAR) is focused on establishing a vertically integrated, domestic rare earth magnet supply chain in the U.S., developing a Stillwater Facility for magnet manufacturing and the Round Top Project for mineral extraction[226](index=226&type=chunk) - Rare earth magnets are critical for various industries including defense, automotive, aviation, AI robotics, medical, and consumer electronics[226](index=226&type=chunk) - The company has been in exploration and research stages since its formation and has not yet realized any revenues from its planned operations[226](index=226&type=chunk) [Our Business Model](index=51&type=section&id=Our%20Business%20Model) This section describes the company's dual-facility strategy for magnet production and mineral extraction, highlighting current operational status - The Stillwater Facility in Oklahoma is being developed for research, development, and production of neo magnets, with magnet production capabilities currently being completed[227](index=227&type=chunk) - The company controls mining rights at Round Top Mountain in Texas for rare earth minerals, but extraction has not yet begun, and its development involves a high degree of financial risk and uncertainty[228](index=228&type=chunk) - As production has not commenced at either facility, the company currently has no operating income, cash flows, or revenues[229](index=229&type=chunk) [Recent Developments](index=52&type=section&id=Recent%20Developments) This section outlines key financial events, including PIPE financing, FPA terminations, and warrant exercises - On May 2, 2025, the company closed a **$75.0 million** Private Investment in Public Equity (PIPE) financing, issuing **8.55 million** common stock shares, a pre-funded warrant for **2.2 million** shares, and a warrant for **10.7 million** shares[231](index=231&type=chunk) - Forward Purchase Agreements (FPAs) with three investors, covering approximately **1.89 million** shares, were terminated during Q2 2025, resulting in **$20.8 million** cash remitted to the company[232](index=232&type=chunk)[233](index=233&type=chunk) - During Q2 2025, investors exercised **0.13 million** Investor warrants and **2.92 million** Series A warrants, generating **$1.5 million** and **$20.4 million** in cash payments, respectively[234](index=234&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) This section analyzes the company's operating expenses, other income, and net loss, explaining key drivers of financial performance - The company has no operating revenues and is dependent on external financings, expecting to incur operating losses until its Stillwater Facility generates net profits or the Round Top Project achieves profitable commercial production[236](index=236&type=chunk) Operating Expenses and Other Income (Loss) Comparison (In thousands) | Category (In thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :---------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | SG&A | $6,227 | $1,286 | $4,941 | 380.0% | $13,256 | $3,933 | $9,323 | 240.0% | | R&D | $2,577 | $1,725 | $852 | 50.0% | $4,266 | $3,776 | $490 | 10.0% | | Total Operating Expenses| $8,804 | $3,011 | $5,793 | 190.0% | $17,522 | $7,709 | $9,813 | 130.0% | | Interest and Dividend | $765 | $45 | $720 | NM | $952 | $154 | $798 | NM | | (Loss) gain on fair market value of financial instruments | $(134,662) | $229 | $(134,891) | NM | $(74,362) | $230 | $(74,592) | NM | | Total Other Income (Loss), net | $(133,909) | $192 | $(134,101) | NM | $(73,509) | $218 | $(73,727) | NM | - For the three months ended June 30, 2025, SG&A expenses increased by **$4.9 million** (**380%**) due to litigation settlement (**$1.8 million**), consulting (**$1.2 million**), and legal services (**$0.6 million**). R&D expenses increased by **$0.9 million** (**50%**) due to feasibility studies[239](index=239&type=chunk)[240](index=240&type=chunk) - For the six months ended June 30, 2025, SG&A expenses increased by **$9.3 million** (**240%**) due to merger-related transaction bonuses, legal services, litigation settlement, and equity-based compensation. R&D expenses increased by **$0.5 million** (**10%**) due to consulting fees and employee costs[244](index=244&type=chunk)[245](index=245&type=chunk) - A significant loss on the fair market value of financial instruments of **$(134.66) million** for the three months and **$(74.36) million** for the six months ended June 30, 2025, was primarily due to the day one loss of the Common Stock component under the **$75M PIPE** and increases in earnout and warrant liabilities[243](index=243&type=chunk)[252](index=252&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet short-term obligations, its cash position, and ongoing capital needs - The company's financial statements are prepared on a going concern basis, but management acknowledges substantial doubt about its ability to continue as a going concern due to no revenues, ongoing losses, and an accumulated deficit[247](index=247&type=chunk)[248](index=248&type=chunk) - For the six months ended June 30, 2025, the company reported a net loss of **$91.0 million** (including a **$74.4 million** non-cash fair value loss on financial instruments) and used **$18.2 million** in operating activities[249](index=249&type=chunk) - As of June 30, 2025, cash and cash equivalents totaled **$121.8 million**, supplemented by **$21.9 million** from warrant exercises and **$75M PIPE** financing, but additional capital is still needed for its strategic plan and raw material inventory[250](index=250&type=chunk) [Cash Flows](index=56&type=section&id=Cash%20Flows) This section provides a detailed analysis of cash flows from operating, investing, and financing activities and their changes Cash Flow Summary (In thousands) | Cash Flows (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | | :------------------------ | :----------------------------- | :----------------------------- | :--------- | | Net cash used in operating activities | $(18,238) | $(8,277) | $(9,961) | | Net cash used in investing activities | $(6,297) | $(1,055) | $(5,242) | | Net cash provided by (used in) financing activities | $129,565 | $(572) | $130,137 | - Net cash used in operating activities increased by **$10.0 million**, primarily due to a higher net loss adjusted for non-cash items like the **$74.6 million** non-cash loss from the **$75M PIPE** valuation and a **$1.7 million** non-cash litigation settlement[253](index=253&type=chunk) - Net cash used in investing activities increased by **$5.2 million**, reflecting additional investments in property, plant, and equipment for the Stillwater Facility[254](index=254&type=chunk) - Net cash provided by financing activities surged by **$130.1 million**, mainly driven by the **$75M PIPE** financing, contributions from the merger, and warrant exercises[255](index=255&type=chunk) [Off-Balance Sheet Arrangements](index=56&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements impacting financial condition or results - The company does not have any material off-balance sheet arrangements that are reasonably likely to have a material current or future effect on its financial condition or results of operations[256](index=256&type=chunk) [Risks and Uncertainties Associated with Future Results of Operations](index=56&type=section&id=Risks%20and%20Uncertainties%20Associated%20With%20Future%20Results%20of%20Operations) This section highlights industry-specific risks, development challenges, and market uncertainties affecting future operations - The company operates in two industries (magnet technology and mineral exploration) subject to intense competition, development risk, and changes in U.S. governmental policies[256](index=256&type=chunk) - The magnet technology industry in the U.S. is nascent, requiring substantial capital commitment for the Stillwater facility, with risks of unanticipated costs, delays, and potential substitute products[257](index=257&type=chunk) - The Round Top Mountain deposit's commercial viability is unproven, and its development involves high risk, with success dependent on factors like mineral attributes, infrastructure, government regulation, and market prices[258](index=258&type=chunk) [Critical Accounting Policies and Estimates](index=58&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section identifies key accounting policies and estimates that require significant management judgment and impact financial reporting - The most critical accounting policies and estimates for understanding the company's financial condition and results of operations include Fair Value, Long-Lived Assets, Equity-based Compensation, and the Going Concern assessment[259](index=259&type=chunk) - These estimates are based on historical experience and assumptions, but actual results could differ significantly, impacting future financial statements[259](index=259&type=chunk) [Recently Adopted Accounting Standards](index=58&type=section&id=Recently%20Adopted%20Accounting%20Standards) This section refers to disclosures on recently adopted accounting standards within the financial statements notes - Information on recently adopted accounting standards is incorporated by reference from Note 2, 'Summary of Significant Accounting Policies,' in Part I, Item 1 of this Form 10-Q[261](index=261&type=chunk) [Emerging Growth Company Status](index=58&type=section&id=Emerging%20Growth%20Company%20Status) This section explains the company's status as an emerging growth company and its election regarding accounting standard compliance - The company is an emerging growth company and has elected to take advantage of the extended transition period for complying with new or revised accounting standards, which may affect comparability with other public companies[262](index=262&type=chunk) - The company expects to retain its emerging growth company status until the earliest of its annual revenues exceeding **$1.235 billion**, the fifth anniversary of its public company registration, issuing over **$1.0 billion** in non-convertible debt, or qualifying as a large accelerated filer[264](index=264&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not required for the company as it qualifies as a 'smaller reporting company' under Regulation S-K - The company is not required to provide quantitative and qualitative disclosures about market risk under Regulation S-K because it is a 'smaller reporting company'[263](index=263&type=chunk) [ITEM 4. Controls and Procedures](index=59&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter - The company's disclosure controls and procedures were evaluated by management, including the CEO and CFO, and concluded to be effective at the reasonable assurance level as of June 30, 2025[265](index=265&type=chunk)[266](index=266&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[267](index=267&type=chunk) - The effectiveness of any control system is subject to limitations, providing only reasonable, not absolute, assurance that objectives will be attained[268](index=268&type=chunk) [PART II. OTHER INFORMATION](index=60&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, and other significant corporate information [ITEM 1. Legal Proceedings](index=60&type=section&id=ITEM%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 8, 'Commitments and Contingencies–Litigation,' in Part I, Item 1 of this Quarterly Report on Form 10-Q - Details on legal proceedings are provided in Note 8, 'Commitments and Contingencies–Litigation,' within the financial statements section[271](index=271&type=chunk) [ITEM 1A. Risk Factors](index=60&type=section&id=ITEM%201A.%20Risk%20Factors) The company refers to its 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, for a comprehensive description of risk factors, noting no material changes as of the current report's filing date - Risk factors are described in the company's 2024 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025[272](index=272&type=chunk) - As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the previously disclosed risk factors[273](index=273&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - There were no unregistered sales of equity securities and no use of proceeds to report[274](index=274&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=60&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities to report[275](index=275&type=chunk) [ITEM 4. Mine Safety Disclosures](index=60&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures during the period - There were no mine safety disclosures to report[276](index=276&type=chunk) [ITEM 5. Other Information](index=60&type=section&id=ITEM%205.%20Other%20Information) This section details the adoption of a Severance and Change of Control Protection Plan for executive officers and senior management, outlining severance benefits based on termination circumstances. It also covers recent Founder and Annual Equity Grants of restricted stock units (RSUs) to executive officers and confirms no Rule 10b5-1 trading arrangements were adopted or terminated during the quarter - On August 11, 2025, the Board approved a Severance and Change of Control Protection Plan for executive officers and certain senior management, providing severance benefits upon termination without cause or resignation for good reason[277](index=277&type=chunk) - Severance benefits include **12 months** of base salary and COBRA coverage for the CEO (**6 months** for others) and acceleration of the next tranche of outstanding equity awards[277](index=277&type=chunk) - In a change of control scenario, the CEO is entitled to **1.5 times** the sum of annual base salary and target bonus, **18 months** of COBRA, and full equity acceleration (**1 time** for others, **12 months** COBRA)[279](index=279&type=chunk) - Founder and Annual Equity Grants of time-based vesting restricted stock units (RSUs) were approved on August 11, 2025, for executive officers, including **90,992 RSUs** vesting over **two years** and **181,984 RSUs** vesting over **three years** for the CEO[281](index=281&type=chunk) - No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter ended June 30, 2025[282](index=282&type=chunk) [ITEM 6. Exhibits](index=62&type=section&id=ITEM%206.%20Exhibits) This section provides a comprehensive index of exhibits filed with the Quarterly Report on Form 10-Q, including certificates of incorporation, warrant forms, securities purchase agreements, and certifications - The exhibit index lists various documents filed, such as the Certificate of Incorporation, Certificate of Designation for Preferred Stock, Warrant forms, Securities Purchase Agreement, and Registration Rights Agreement[285](index=285&type=chunk) - New exhibits filed herewith include the Severance and Change of Control Protection Plan, Form of RSU Agreement for Officers and Employees, and certifications from the Principal Executive and Financial Officers[285](index=285&type=chunk) [Signatures](index=63&type=section&id=Signatures) The report is duly signed on behalf of USA Rare Earth, Inc. by its Chief Executive Officer, Joshua Ballard, and Chief Financial Officer, William Robert Steele Jr., on August 11, 2025 - The report is signed by Joshua Ballard, Chief Executive Officer (Principal Executive Officer), and William Robert Steele Jr., Chief Financial Officer (Principal Financial and Accounting Officer), on August 11, 2025[289](index=289&type=chunk)

Executive Summary & Operational Highlights [Executive Commentary & Key Operational Highlights](index=1&type=section&id=Executive%20Commentary%20%26%20Key%20Operational%20Highlights) USA Rare Earth prepares for early 2026 production at Stillwater magnet facility, with strong customer interest and supply chain focus - USA Rare Earth is seeing a surge of customer interest as it prepares to begin production at its Stillwater, Oklahoma magnet facility in early 2026[1](index=1&type=chunk) - The company has signed **12 initial agreements** and is actively engaging with over **70 companies**, with the potential to sell out its first **1,200-ton production line** prior to commissioning[1](index=1&type=chunk)[4](index=4&type=chunk) - Strategic focus on accelerating and strengthening the mine-to-magnet supply chain through targeted internal investments and strategic opportunities[1](index=1&type=chunk) - Operational milestones include the Stillwater, Oklahoma magnet facility being on track for **1Q26 commissioning** and successful extraction of gallium and heavy rare earth concentrates from the Round Top deposit[4](index=4&type=chunk) - The company expanded its team with key talent in engineering, sales, manufacturing, and finance[4](index=4&type=chunk) Financial Performance Overview [GAAP Financial Highlights](index=1&type=section&id=GAAP%20Financial%20Highlights) Q2 2025 net loss and loss from operations increased significantly due to financial instrument fair value loss, despite a strong cash balance | Metric | Q2'2025 (QTD, In thousands) | Q2'2024 (QTD, In thousands) | Q2'2025 (YTD, In thousands) | Q2'2024 (YTD, In thousands) | | :-------------------------- | :------------ | :------------ | :------------ | :------------ | | Loss from operations | $(8,804) | $(3,011) | $(17,522) | $(7,709) | | Net loss | $(142,713) | $(2,819) | $(91,031) | $(7,491) | | Diluted net loss per share | $(1.54) | $(0.04) | $(0.99) | $(0.12) | | Net cash used in operating activities | $(7,909) | $(4,044) | $(18,238) | $(8,277) | | Cash (as of period end) | N/A | N/A | $121,791 | $16,761 | - The company ended the quarter with **$121.8 million** in cash and no significant debt, with a current cash balance of **$128.1 million** as of August 7, 2025[4](index=4&type=chunk) [Non-GAAP Financial Highlights](index=1&type=section&id=Non-GAAP%20Financial%20Highlights) Q2 2025 adjusted net loss, excluding financial instrument fair value changes, increased, as did adjusted diluted net loss per common share | Metric | Q2'2025 (QTD, In thousands) | Q2'2024 (QTD, In thousands) | Q2'2025 (YTD, In thousands) | Q2'2024 (YTD, In thousands) | | :-------------------------------- | :------------ | :------------ | :------------ | :------------ | | Adjusted net loss | $(7,844) | $(2,826) | $(16,312) | $(7,299) | | Adjusted net loss per common share - Diluted | $(0.08) | $(0.05) | $(0.18) | $(0.12) | Detailed Financial Statements [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets significantly increased to **$179.7 million** as of June 30, 2025, driven by cash, with liabilities rising due to earnout and warrant liabilities | Metric | June 30, 2025 (In thousands) | December 31, 2024 (In thousands) | | :----------------------------------- | :--------------------------- | :----------------------------- | | Cash and cash equivalents | $121,791 | $16,761 | | Total current assets | $123,545 | $22,273 | | Property, plant and equipment, net | $33,031 | $26,529 | | Total assets | $179,701 | $69,069 | | Accounts payable | $2,238 | $1,823 | | Accrued liabilities | $5,134 | $3,071 | | Earnout liabilities | $100,007 | — | | Warrant liabilities | $169,020 | — | | Total liabilities | $286,393 | $15,125 | | Stockholders' (deficit) equity | $(131,934) | $34,021 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 net loss significantly increased to **$(142,713) thousand**, primarily due to a **$(134,662) thousand** loss on financial instruments and higher operating expenses | Metric | Three Months Ended June 30, 2025 (In thousands) | Three Months Ended June 30, 2024 (In thousands) | Six Months Ended June 30, 2025 (In thousands) | Six Months Ended June 30, 2024 (In thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Selling, general and administrative | $6,227 | $1,286 | $13,256 | $3,933 | | Research and development | $2,577 | $1,725 | $4,266 | $3,776 | | Total operating expenses | $8,804 | $3,011 | $17,522 | $7,709 | | Loss from operations | $(8,804) | $(3,011) | $(17,522) | $(7,709) | | (Loss) gain on fair market value of financial instruments | $(134,662) | $229 | $(74,362) | $230 | | Net loss | $(142,713) | $(2,819) | $(91,031) | $(7,491) | | Net loss attributable to common stockholders | $(142,506) | $(2,597) | $(90,674) | $(7,069) | | Net loss per share: Basic and diluted | $(1.54) | $(0.04) | $(0.99) | $(0.12) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q2 2025 saw increased cash used in operating and investing activities, offset by a **$109,596 thousand** financing inflow from PIPE and warrant exercises, leading to substantial cash increase | Metric | Three Months Ended June 30, 2025 (In thousands) | Three Months Ended June 30, 2024 (In thousands) | Six Months Ended June 30, 2025 (In thousands) | Six Months Ended June 30, 2024 (In thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash used in operating activities | $(7,909) | $(4,044) | $(18,238) | $(8,277) | | Net cash used in investing activities | $(3,247) | $(36) | $(6,297) | $(1,055) | | Net cash provided by (used in) financing activities | $109,596 | $(167) | $129,565 | $(572) | | Net change in cash and cash equivalents | $98,440 | $(4,247) | $105,030 | $(9,904) | | Cash and cash equivalents, end of period | $121,791 | $3,295 | $121,791 | $3,295 | - Significant cash inflow from financing activities in Q2 2025 included **$70,178 thousand** from PIPE financing and **$21,951 thousand** from exercise of warrants[17](index=17&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This reconciliation adjusts GAAP net loss by reversing financial instrument fair value loss/gain to derive adjusted net loss, significantly reducing Q2 2025 reported net loss | Metric | Three Months Ended June 30, 2025 (In thousands) | Three Months Ended June 30, 2024 (In thousands) | Six Months Ended June 30, 2025 (In thousands) | Six Months Ended June 30, 2024 (In thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net loss attributable to common stockholders | $(142,506) | $(2,597) | $(90,674) | $(7,069) | | Reversal of loss (gain) on fair market value of financial instruments | $134,662 | $(229) | $74,362 | $(230) | | Adjusted net loss | $(7,844) | $(2,826) | $(16,312) | $(7,299) | | Adjusted net loss per common share - basic and diluted | $(0.08) | $(0.05) | $(0.18) | $(0.12) | Additional Company Information [About USA Rare Earth](index=4&type=section&id=About%20USA%20Rare%20Earth) USA Rare Earth develops a Stillwater, Oklahoma, rare earth magnet plant to establish a domestic supply chain for critical minerals, vital for high-growth sectors and national security - USA Rare Earth is developing a rare earth sintered neo magnet (NdFeB) manufacturing plant in Stillwater, Oklahoma[11](index=11&type=chunk) - The company intends to establish domestic rare earth and critical minerals supply, extraction, and processing capabilities to supply its magnet plant and market surplus materials[11](index=11&type=chunk) - Rare earth magnets are critical to various industries including defense, automotive, aviation, industrial, AI Robotics, medical, and consumer electronics[11](index=11&type=chunk) - USAR's focus on domestic production aligns with national priorities for a sustainable and secure supply of critical materials[11](index=11&type=chunk) [Forward-looking Statements](index=2&type=section&id=Forward-looking%20Statements) This disclaimer highlights that forward-looking statements involve risks and uncertainties, potentially causing actual results to differ, including facility development, competition, and going concern - Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations[5](index=5&type=chunk) - Key risks include those related to magnet production facility development, competition, profitable growth, customer/supplier relationships, talent retention, rare earth supply/demand, production timing/costs, capital requirements, and going concern ability[5](index=5&type=chunk) - The company undertakes no obligation to update any forward-looking statements[5](index=5&type=chunk) [Use of Non-GAAP Financial Measures](index=2&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP financial measures, such as adjusted net loss, providing supplemental insights into financial trends and operating performance - Non-GAAP financial measures (adjusted net loss, adjusted net loss per common share) are included as supplemental information to GAAP measures[6](index=6&type=chunk) - These measures provide useful supplemental information to management and investors regarding financial and business trends and for evaluating ongoing operating results[7](index=7&type=chunk) - Adjusted net loss excludes (loss) gain on fair market value of financial instruments from net loss attributable to common stockholders[8](index=8&type=chunk) [Conference Call and Disclosure Information](index=4&type=section&id=Conference%20Call%20and%20Disclosure%20Information) USA Rare Earth held an August 11, 2025, conference call for Q2 and six-month results, with replay, and uses its investor relations website for Regulation FD compliance - A conference call was held on Monday, August 11, 2025, at **4:00 PM CT / 5:00 PM ET** to discuss Q2 and six-month results[9](index=9&type=chunk) - Replay information for the conference call is available until **September 11, 2025**[9](index=9&type=chunk) - USA Rare Earth uses the investor relations section on its website (www.usare.com) to comply with Regulation FD disclosure obligations[10](index=10&type=chunk)

Financial Performance - For the three months ended March 31, 2025, total operating costs and expenses increased by 86% to $8.72 million compared to $4.70 million in the same period of 2024 [186]. - Selling, general and administrative expenses rose by 166% to $7.03 million, primarily due to a $3.7 million increase in financial consulting and legal fees [187]. - Research and development expenses decreased by 18% to $1.69 million, attributed to lower consulting fees related to feasibility studies [188]. - The company reported a net income of $51.68 million for the quarter ended March 31, 2025, largely due to a non-cash fair value gain on financial instruments of $60.3 million [193]. - Net cash used in operating activities increased by $6.1 million, from $(4.2) million in Q1 2024 to $(10.3) million in Q1 2025 [200]. - Cash used in investing activities rose by $2.0 million, from $(1.0) million in Q1 2024 to $(3.1) million in Q1 2025, primarily due to additional investments in property, plant, and equipment [201]. - Net cash provided by financing activities increased by $20.4 million, from $(0.4) million in Q1 2024 to $20.0 million in Q1 2025, largely attributed to net financing activities and contributions from the Merger [202]. Company Operations - USA Rare Earth, Inc. has not yet realized any revenues from its planned operations and is currently in the exploration and research stages [170][173]. - The company has not yet commenced production at its Stillwater Facility or Round Top Project, which involves high financial risk and uncertainty [172][173]. - The Round Top Deposit has not yet established commercially exploitable quantities of mineral reserves, posing a risk to future mining operations [207]. Financial Position and Capital Needs - As of March 31, 2025, the company had cash and cash equivalents of $23.4 million, with additional cash proceeds of $11.5 million received from early terminations of Forward Purchase Agreements [197][194]. - The company expects to incur significant additional annual expenses related to public company regulatory requirements following its merger and listing on NASDAQ [183]. - The company has a substantial doubt regarding its ability to continue as a going concern for the next twelve months due to the need for additional capital [196]. - The company intends to use net proceeds from a recent $75 million PIPE financing for working capital and general corporate purposes [175]. - The company entered into a $1.0 million Senior Convertible Promissory Note agreement with a 10% interest rate, maturing on July 28, 2025 [203]. Risks and Accounting Policies - The company faces significant risks and uncertainties in the magnet technology industry, including competition and development risks [205]. - The company considers Fair Value, Long-Lived Assets, and Equity-based Compensation as critical accounting policies impacting financial condition and results [208]. - The company has elected to retain its emerging growth company status, allowing for an extended transition period for complying with new accounting standards [212].

Financial Performance - USA Rare Earth reported a net income of $51.8 million for Q1 2025, compared to a net loss of $4.5 million in Q1 2024[19] - Adjusted net loss for Q1 2025 was $8.5 million, compared to an adjusted net loss of $4.5 million in Q1 2024[24] - The company reported a revenue of $1.5 billion for Q3 2023, representing a 15% year-over-year increase[26] - The company expects Q4 2023 revenue guidance of $1.7 billion, indicating a 13% growth from Q3 2023[26] - Gross margin improved to 45%, up from 42% in the previous quarter[26] Assets and Cash Flow - Total assets increased to $77.1 million as of March 31, 2025, up from $69.1 million at the end of 2024[17] - Cash and cash equivalents increased to $23.4 million at the end of Q1 2025, up from $16.8 million at the beginning of the year[21] - The company raised over $100 million since the beginning of 2025 to support its business operations[4] Operating Costs and Expenses - Operating costs and expenses for Q1 2025 were $8.7 million, significantly higher than $4.7 million in Q1 2024[19] - Operating expenses increased by 10% due to higher marketing investments[26] Production and Technology - The company produced dysprosium oxide with a purity of over 99% from the Round Top deposit[6] - USA Rare Earth is advancing its processing technologies in Colorado to enhance its rare earth supply chain[4] - The company is focused on establishing domestic rare earth production to meet the growing demand from various industries[14] Customer and Market Expansion - The company signed its first customer MOU for rare earth sintered magnet production scheduled for 2026[6] - New product launches contributed to a 25% increase in sales in the last quarter[26] - Market expansion efforts led to a 30% increase in international sales[26] - The company plans to enter two new markets by the end of 2024, targeting a 15% market share[26] Strategic Initiatives - The company completed a strategic acquisition for $500 million, expected to enhance market share[26] - The company invested $200 million in R&D for new technologies, aiming to enhance product offerings[26] User Growth - User base grew to 10 million active users, a 20% increase compared to the previous quarter[26]

Business Operations and Financial Performance - New USARE has generated negative operating cash flows since inception and may continue to experience negative cash flow from operations in the future [30]. - The ability to convert current commercial discussions into definitive contracts is uncertain, which may adversely affect business prospects [30]. - The company has not commenced producing and selling neo magnets, limiting the accuracy of any forward-looking forecasts [30]. Project Development and Risks - The Round Top Project is currently at the exploration stage and may not develop into a producing mine, posing risks to future operations [30]. - The company operates in a highly competitive industry, which may affect profitability due to fluctuations in demand and pricing for neo magnets [30]. - The production of neo magnets is capital-intensive, requiring substantial resources, and any inability to secure necessary capital could negatively impact operations [30]. - The success of the business will depend on the growth of existing and emerging uses for neo magnets [30]. Regulatory and Environmental Considerations - The company is subject to extensive environmental regulations, which could impose significant costs and liabilities [34]. Human Resources and Management - The company may face challenges in retaining key personnel, which is critical for achieving desired growth levels [34]. Corporate Structure - The Business Combination will be treated as a reverse recapitalization, with USARE OpCo as the predecessor entity [17]. - The company is classified as a smaller reporting company under Rule 12b-2 of the Exchange Act and is not required to provide the information typically required under this item [293].

Financial Performance - For the three months ended September 30, 2024, the company reported a net income of $1,510,125, consisting of interest and dividend income of $3,427,851, partially offset by operating costs of $1,918,166[122]. - For the nine months ended September 30, 2024, the company had a net income of $7,474,229, with interest and dividend income totaling $10,167,128, offset by operating costs of $2,697,453[123]. - The company reported a net income of $2,856,883 for the three months ended September 30, 2023, with interest income from marketable securities of $3,270,011[124]. - The company had a net income of $3,681,499 for the period from March 6, 2023, through September 30, 2023, with interest income totaling $4,329,480[125]. - Cash used in operating activities for the nine months ended September 30, 2024 was $759,464, with a net income of $7,474,229[143]. - The company reported no dilutive securities as of September 30, 2024, resulting in diluted income per share being the same as basic income per share[160]. Business Combination and Acquisition Plans - The company entered into a Business Combination Agreement with USARE on August 21, 2024, which will result in USARE becoming a wholly owned subsidiary of the company[126]. - The aggregate consideration for the merger with USARE is estimated at $800,000,000, minus USARE's aggregate indebtedness, with additional earn-out considerations of up to 10,000,000 shares of New USARE Common Stock[132]. - The company plans to change its jurisdiction of incorporation to Delaware prior to the closing of the USARE Business Combination[127]. - The company expects to incur significant costs in pursuing its acquisition plans and cannot assure the success of completing a Business Combination[120]. - The Company has agreed to purchase shares of New USARE's 12% Series A Cumulative Convertible Preferred Stock for an aggregate purchase price of $9,117,648[135]. - The Sponsor has agreed to forfeit 60,000 New USARE Warrants for every $1,000,000 by which gross proceeds from the closing of the USARE Business Combination are below $50,000,000, up to a maximum of 1,500,000 Warrants[137]. - In connection with the USARE Business Combination, CF&CO will accept a cash fee of $4,000,000 or a combination of $2,000,000 cash and 400,000 shares of New USARE Common Stock, plus 2.0% of capital raised exceeding $50,000,000[158]. Capital and Financing - The Company generated gross proceeds of $250,000,000 from the IPO of 25,000,000 Units at $10.00 per Unit, including a partial exercise of the underwriters' over-allotment option[141]. - The Company incurred transaction costs of $18,361,877 related to the IPO, including $4,400,000 in cash underwriting discounts and $13,100,000 in deferred underwriting fees[142]. - As of September 30, 2024, the Company had cash of $141,201, which is intended for identifying and evaluating target businesses[146]. - The Company has an outstanding borrowing of $700,000 under a convertible promissory note issued to CEO Michael Blitzer[150]. - The Company may need to raise additional capital through loans or investments to continue operations and complete its Business Combination[153]. - The company has no long-term debt or capital lease obligations, with a monthly fee of $27,083 to TVC for CFO and Chief of Staff services, which will be reduced to $17,708 in January 2024 and further to $14,746 by September 2024[156]. Market and Regulatory Considerations - The company has not generated any operating revenues since its inception on March 6, 2023, and only incurs non-operating income from interest and dividends[121]. - The company generated non-operating income primarily from interest income on cash and cash equivalents and dividends from marketable securities held in the Trust Account[121]. - Management does not anticipate any material effects from recently issued accounting standards on the company's financial statements[161]. - The company is classified as a smaller reporting company and is not required to provide extensive market risk disclosures[162].

Financial Performance - For the three months ended June 30, 2024, the company reported a net income of $3,044,937, primarily from interest and dividend income of $3,389,364 on marketable securities held in the Trust Account[106]. - For the six months ended June 30, 2024, the company achieved a net income of $5,964,104, with interest and dividend income totaling $6,739,277 from marketable securities[107]. - Cash used in operating activities for the six months ended June 30, 2024, was $269,078, with net income impacted by dividend income of $6,739,277[112]. - Net income per share is calculated by dividing net income by the weighted average number of ordinary shares outstanding, with no dilutive securities affecting the calculation[126]. Marketable Securities - As of June 30, 2024, the company held marketable securities in the Trust Account amounting to $265,710,795, consisting of U.S. government treasury obligations and money market funds[114]. IPO and Transaction Costs - The company completed its IPO on May 30, 2023, raising gross proceeds of $250,000,000 from the sale of 25,000,000 Units, including an over-allotment option[110]. - Transaction costs incurred during the IPO totaled $18,361,877, which included $4,400,000 in cash underwriting discounts and $13,100,000 in deferred underwriting fees[111]. Debt and Financial Obligations - The company has no long-term debt or off-balance sheet arrangements as of June 30, 2024, and has not entered into any special purpose entities[122]. - The company has an outstanding borrowing of $274,750 under a convertible promissory note issued to the CEO, allowing for borrowing up to $2,500,000 for ongoing expenses[119]. Operational Concerns - The company may need to raise additional capital to complete its Business Combination or to cover operational costs, which raises concerns about its ability to continue as a going concern[121]. Services and Expenses - The company incurred $56,646 and $122,536 for services provided by The Venture Collective LLC for the three and six months ended June 30, 2024, respectively[115]. Accounting Standards and Reporting - Management does not anticipate that any recently issued accounting standards will materially affect the Company's financial statements[127]. - The Company qualifies as a smaller reporting company and is not required to provide additional market risk disclosures[129]. Share Structure - The weighted average shares were reduced by 825,000 Class B ordinary shares subject to forfeiture if the over-allotment option was not exercised[126].

Financial Performance - For the three months ended March 31, 2024, the company reported a net income of $2,919,167, primarily from interest and dividend income of $3,349,913 on marketable securities held in the Trust Account[95]. - Cash used in operating activities for the three months ended March 31, 2024, was $156,457, with net income affected by dividend income from marketable securities[100]. - The company has not generated any operating revenues to date and does not expect to do so until after completing a Business Combination[94]. IPO and Capital Raising - The company completed its IPO on May 30, 2023, raising gross proceeds of $250,000,000 from the sale of 25,000,000 Units at $10.00 per Unit, along with an additional $7,650,000 from the sale of Private Placement Warrants[98]. - The company incurred transaction costs of $18,361,877 related to the IPO, including $4,400,000 in cash underwriting discounts and $13,100,000 in deferred underwriting fees[99]. - The company may need to raise additional capital to finance working capital or transaction costs related to its initial Business Combination[105]. Assets and Securities - As of March 31, 2024, the company had marketable securities in the Trust Account valued at $262,321,431, consisting of U.S. government treasury obligations and money market funds[101]. - As of March 31, 2024, the company had cash of $119,208 available for identifying and evaluating target businesses[102]. - The company has no off-balance sheet arrangements or obligations as of March 31, 2024[108]. Liabilities and Obligations - The company has no long-term debt or capital lease obligations, but incurs a monthly fee of $27,083 for services provided by The Venture Collective LLC[109].