American Resources Corp

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

American Resources Corporation’s (ARC or the Company) operations are comprised of ARC (Corporate or Parent) and three operating segments that we describe as American Infrastructure, ReElements and Electrified Materials. During this first quarter of 2025, the Company distributed out to its shareholders 90% ownership interest in American Infrastructure and 80% ownership interests in ReElements. As of September 30, 2025, the Company has determined that American Infrastructure and ReElements, (the “VIEs”) meet the criteria to continue to be consolidated in our financial statements as variable interest entities under ASC 810,Consolidation. The Company holds contractual and financial interests in each of these entities that provide it with the power to direct key activities and the right to receive benefits or the obligation to absorb losses that could be significant.

American Infrastructure (our coal mining operations) is comprised of subsidiaries that were formed or acquired between 2015 and 2020 with operations focused on the extraction, processing, transportation, and distribution of coal for a variety of industries, with a primary focus on metallurgical quality coal to the steel industry. Responsive to adverse market conditions and pricing pressures in the coal industry, during 2023 we suspended our coal production operations which significantly attributed to our decline in consolidated revenues from approximately $39 million in 2022 to $13 million in 2023 and $383,000 in 2024.

Beginning in 2023, the focus of our business and capital allocation shifted towards the diversification of our revenue streams leading to the development of our ReElements and Electrified Materials segments which have been in the development (pre revenue) stages through 2024. Electrified Materials is focused on the aggregation, recovery and sale of recovered metal and steel. We established a new subsidiary, Electrified Materials Corporation (EMC, formerly known as American Metals) to operate this segment of our business. ReElements is focused on the purification and monetization of critical and rare earth element deposits and end of life magnets and batteries. American Rare Earth LLC was initially formed as a subsidiary to comprise the ReElements segment. In 2024, we changed the name of American Rare Earth LLC to ReElement Technologies LLC and recently converted the company from a limited liability corporation to a corporation.

Basis of Presentation and Consolidation*:*

The consolidated financial statements include the accounts of the Company and its variable interest entities. The variable interest entities by segment include:

American Infrastructure:

American Infrastructure Corporation (AIC), Deane Mining, LLC (Deane), ERC Mining Indiana Corp (ERC), McCoy Elkhorn Coal LLC (McCoy), Knott County Coal LLC (KCC), Wyoming County Coal (WCC), Perry County Resources LLC (PCR), Advanced Carbon Materials LLC (ACM), and T.R. Mining & Equipment Ltd. (TR Mining).

ReElements:

ReElement Technologies Corporation (RLMT), ReElement Marion LLC (RLM), and Kentucky Lithium LLC (KYL).

Electrified Materials:

Electrified Materials Corporation (EMC).

Corporate Office:

American Opportunity Venture II, LLC (AOV II).

All significant intercompany accounts and transactions have been eliminated in consolidation. Entities for which ownership is less than 100% require that a determination is made as to whether there is a requirement to apply the variable interest entity (VIE) model to the entity. Where the company holds current or potential rights that give it the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, combined with a variable interest that gives the Company the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company would be deemed the primary beneficiary.

Going Concern

The Company has evaluated whether there are any conditions and events considered in the aggregate, which raise substantial doubt about its ability to continue as a going concern within one year beyond the issuance date of these financial statements. Based on such evaluation and the Company’s current plans, which are subject to change, and the Company’s existing liquidity, there is substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued.

The accompanying financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis. The Company will continue to seek to raise additional funding through debt or equity financing during the next twelve months from the date of issuance of these financial statements. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. There is no guarantee the Company will be successful in achieving these objectives.

A. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS:

The Company has identified certain accounting errors in the Company’s historical consolidated financial statements relating to compliance with U.S. GAAP. As a result, the Audit Committee, in consultation with the Company’s management, concluded that the Company’s previously issued audited consolidated financial statements and the notes thereto as of and for the year ended December 31, 2023 and unaudited consolidated financial statements and the notes thereto as of and for the three and six months ended September 30, 2024, require restatement and should not be relied upon. Restated financial statements for the year ended December 31, 2023 were included in our 2024 Form 10-K filed with the SEC on May 19, 2025.

The following includes descriptions of the significant adjustments to the Company’s previously reported September 30, 2024 consolidated financial statements.

1. Treasury bills and mutual fund reclassification

Treasury bills and mutual fund investments were incorrectly classified as cash and cash equivalents versus short-term investments on the balance sheets and the change in fair value of the investments was not recognized in the statement of operations. The adjustment corrects these matters.

2. Restricted investment reclassification

Cash balances in the WCC bond fund balances were classified as short-term investments on the balance sheets. The adjustment reclassifies the WCC bond fund balances to restricted cash.

3. Bond balance and restricted cash reclassification

Based on the review of the terms, provisions and covenants under the WCC Bond, it was determined that the Company was not in compliance with certain provisions with those matters dating back to December 31, 2023. The assessment was that these compliance issues could be deemed an event of default which then could lead to the acceleration of maturity. Accordingly, the outstanding bond balance and associated restricted cash funds were reclassified to current liabilities and current assets, respectively on the balance sheet.

4. Inventories

During the current fiscal year, the Company identified a prior period error related to a re-purchase arrangement with Marco International Corporation. Although revenue was properly recognized, the Company incorrectly accounted for the related inventory and cost of goods sold. Specifically, inventory was not removed from the balance sheet at the time of sale, resulting in an overstatement of inventory and an understatement of COGS as of December 31, 2023 that was adjusted in the 2023 restatement but had not been adjusted in the previously filed September 30, 2024 balance sheet.

5. Prepaid deposit removal adjustment

Certain prepaid deposits were refunded to the Company. However, the deposit amount recognized in the balance sheet was not de-recognized upon the Company’s receipt of such funds. The adjustment de-recognizes the deposits from the balance sheet and reverses the income recognized in the statement of operations that had been recorded when the funds were returned to the Company.

6. Property and Equipment, net adjustment

Based on review of the property and equipment detail, the Construction in Progress (CIP) line item included amounts related to bond-funded projects that were either completed or misclassified. This adjustment reflects the cleanup and proper classification of bond-related details within the CIP account.

7. Accounts payable reclassification

A reclassification adjustment was made to properly present liabilities within the balance sheet. Certain liabilities were previously misclassified among trade payables, non-trade payables, and accounts payable – related party. This adjustment corrects the classification to reflect the nature of the underlying transactions more accurately.

8. Accrued expenses and settlement adjustments

In connection with the 2024 audit and the re-audit of the 2023 financial statements, legal letter responses were requested and received from attorneys representing the Company with various litigation matters. Based on those responses, the Company concluded a loss was probable and reasonably estimated under Accounting Standards Codification 450. It was also concluded that the status of these litigation cases as of December 31, 2023 supported that a potential loss was probable at that date. Accordingly, adjustments were recognized to record the reserve for these potential litigation losses as of December 31, 2023 with the necessity of the reserve continuing as of September 30, 2024.

9. Long term debt, convertible promissory note recognition and interest expense/income adjustment

An adjustment was recorded to correct previously understated interest expense resulting from an error in the Company’s debt rollforward calculation. The prior calculation did not accurately reflect the outstanding balances and timing of interest accruals related to certain borrowings. This restatement reflects a true-up of interest expense to properly account for interest incurred during the applicable periods. In addition, the Company identified an error in the calculation of its debt roll forward, which resulted in an understatement of accrued interest, current portion of long-term debt, convertible promissory notes – related party, and interest expense in prior periods. This adjustment corrects the interest expense to reflect the proper accrual based on outstanding debt balances. In addition, there was an adjustment to correct the amount of interest income earned on the WCC Bond.

10. Failed leaseback adjustment

Certain fixed assets under the Maxus lease agreements were incorrectly recorded as a sale and lease-back arrangement, resulting in the removal of the assets from the balance sheet and recognition of a gain on sale. This adjustment reinstates the fixed assets and derecognizes the right of use assets and related finance lease liabilities previously recorded. Additionally, the previously recorded finance lease liabilities have been reclassified as Other Financing Obligations on the balance sheet.

11. Black-Scholes calculation adjustment

An acceptable valuation model, such as the Black-Scholes model was not utilized to determine the fair value of equity awards granted. Black-Scholes calculations have now been used to determine the fair value of the equity awards. This adjustment has been made to reflect the appropriate fair value of the equity awards.

12. Reclassification of operating expenses

An adjustment was made to correct the classification of certain operating expenses within the consolidated statements of operations. Previously, certain expenses were misclassified among general and administrative (G&A), development expenses, professional fees, production taxes and royalties, and cost of coal sales and processing. This adjustment reclassifies these expenditures to the correct expense classification in the statement of operations.

13. Depreciation and amortization of mining rights

Depreciation and amortization of mining rights in the 2024 statement of operations were overstated by $550,640 and $307,294, respectively, due to an error in the Company’s calculation of depreciation and amortization for the quarter ended September 30, 2024. Accumulated depreciation included in property & equipment, net in the March 31, 2025 and December 31, 2024 balance sheets was overstated by $857,934.

** Represents revision for immaterial error correction*

The following tables summarize the effect of the restatement on each financial statement line item in the consolidated financial statements.

Refer to the financial statements included herein which present the impact of the restatement of the Company’s previously reported consolidated balance sheet, the statement of operations, statement of cashflow, and the consolidated stockholders’ deficit for the three and nine months ended September 30, 2024.

Use of Estimates:

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its assumptions on historical experiences and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In addition, management considers the basis and methodology used in developing and selecting these estimates, the trends in and amounts of these estimates, specific matters affecting the amount of and changes in these estimates, and any other matters related to these estimates, including significant issues concerning accounting principles and financial statement presentation. Such estimates and assumptions could change in the future as more information becomes known which could impact the amounts reported and disclosed herein. Significant estimates include, carrying amounts of long-lived assets, valuation assumptions for share-based payments, evaluation of debt modification accounting, effective borrowing rate determinations, analysis of fair value transferred upon debt extinguishment, legal claims and contingencies, valuation and calculation of measurements of income tax assets and liabilities.

Cash, Cash Equivalents and Restricted cash: Cash and cash equivalents include bank demand deposits and money market funds that invest primarily in U.S. government securities.

Restricted cash and cash equivalents are held in trusts related to the Tax-Exempt Bonds and are restricted to withdrawal as required by the agreement entered into by the Company.

The following table sets forth the total of cash, cash equivalents, and restricted cash reported in the consolidated balance sheets.

**Restricted Investments:**Consist of U.S. government securities, corporate fixed income, and U.S. government securities that are held in trusts related to the Tax-Exempt Bonds and are restricted as to withdrawal as required by the agreement entered into by the Company. All investments are classified as trading securities as of September 30, 2025 and December 31, 2024. Trading securities are recorded initially at cost and are adjusted to fair value at each reporting period with unrealized gains and losses recorded in the current period earnings or loss, except for those amounts that are directly attributable to project funding activities, which are capitalized to construction in progress as part of the cost of the related asset.

Related Party Policies: In accordance with FASB ASC 850 related parties are defined as either an executive, director or nominee, greater than 10% beneficial owner, and or immediate family member and affiliated businesses of any of the proceedings.

***Property and Equipment:***Property and Equipment are recorded at cost. For equipment, depreciation is calculated using the straight-line method over the estimated useful lives of the assets, generally ranging from five to twenty years.

Construction in progress is related to the construction or development of leasehold improvements and equipment that have not yet been placed in service for our intended use. Construction in progress represents capital expenditures for direct costs of construction or acquisition and design fees incurred, and a proportional amount of bond interest income and expense for amounts capitalized directly related to the construction. Capitalization of these costs ceases and the construction in progress is transferred to the appropriate category of property, plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. Construction in progress is not depreciated.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net undiscounted cash flows expected to be generated by the related assets. If these assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets.

There was no impairment loss recognized during the periods ending September 30, 2025 and 2024. Costs related to maintenance and repairs which do not prolong the asset’s useful life are expensed as incurred.

Mine Development: Costs of developing new coal mines, including asset retirement obligation assets, are capitalized and amortized using the units-of-production method over estimated coal deposits or proven reserves. Costs incurred for the development and expansion of existing reserves are expensed as incurred.

Coal Production and Holdings Costs*:*Coal production and holdings costs for coal mined and processed include direct labor, materials and utilities. Activities related to metal recovery are inherent in both direct coal labor and overhead labor and do not require additional variable costs.

***Asset Retirement Obligations (ARO) – Reclamation:***At the time they are incurred, legal obligations associated with the retirement of long-lived assets are reflected at their estimated fair value, with a corresponding charge to mine development. Obligations are typically incurred when we commence development of underground and surface mines, and include reclamation of support facilities, refuse areas and slurry ponds or through acquisitions.

Obligations are reflected at the present value of their future cash flows. We reflect accretion of the obligations for the period from the date they incurred through the date they are extinguished. The asset retirement obligation assets are amortized based on expected reclamation outflows over estimated recoverable coal deposit lives. We are using discount rates ranging from 6.16% to 7.22%, risk free rates ranging from 1.76% to 2.92% and inflation rate of 2%. Revisions to estimates are a result of changes in the expected spending estimate or the timing of the spending estimate associated with planned reclamation. Federal and State laws require that mines be reclaimed in accordance with specific standards and approved reclamation plans, as outlined in mining permits. Activities include reclamation of pit and support acreage at surface mines, sealing portals at underground mines, and reclamation of refuse areas and slurry ponds.

We assess our ARO at events warrant to reflect revisions for permit changes, changes in our estimated reclamation costs and changes in the estimated timing of such costs. Management is currently in the process of assessing the ARO for the fiscal year and will include revisions if any upon completion of the assessment.

The table below reflects the changes to our ARO for the nine months ended September 30, 2025 and 2024:

Accretion expense amounted to $247,877 and $247,992 for the three months ending September 30, 2025 and 2024, respectively. Accretion expense amounted to $743,631 and $744,885 for the nine months ending September 30, 2025 and 2024, respectively.

Revenue Recognition: Revenue is recognized when performance obligations under the terms of a contract with our customers are satisfied; for all contracts this occurs when control of the promised goods have been transferred to our customers. For coal shipments to domestic and international customers via rail, control is transferred when the railcar is loaded. Our revenue is comprised of sales of mined coal, sales of recovered metals and service fees for processing coal.

All the activity is undertaken in eastern Kentucky, Western West Virginia, and Southern Indiana. Revenue from metal recovery and sales are recognized when conditions within the contract or sales agreement are met including transfer of title. Revenue from coal processing and loading are recognized when services have been performed according to the contract in place. Our coal sales generally include 10 to 30-day payment terms following the transfer of control of the goods to the customer. We typically do not include extended payment terms in our contracts with customers. Our contracts with customers typically provide for minimum specifications or qualities of the coal we deliver. Variances from these specifications or quantities are settled by means of price adjustments. Generally, these price adjustments are settled within 30 days of delivery and are insignificant.

***Income Taxes:***We file a consolidated federal income tax return with our subsidiaries. The provision for income taxes is computed by applying statutory rates to income before taxes.

Income Taxes include U.S. federal and state income taxes currently payable and deferred income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period of enactment. Deferred income tax expense represents the change during the year in the deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized.

Management believes that the Company’s income tax filing positions will be sustained on audit or any potential audit adjustments would be offset by the utilization of the Company’s unrecognized net operating loss carryforwards. Therefore, no reserve for uncertain income tax positions has been recorded. The Company’s policy for recording interest and penalties, if any, associated with income tax examinations will be to record such items as a component of income taxes.

Fair Value: The Company follows the provisions of Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) Topic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

Note 3 presents the Company’s financial assets or liabilities measured at fair value as of September 30, 2025 and December 31, 2024. The carrying amounts of the Company’s cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their fair value at September 30, 2025 and December 31, 2024 due to their short-term nature.

Leases: The Company reviews all arrangements for potential leases, and at inception, determines whether a lease is an operating or finance lease. Lease assets and liabilities, which generally represent the present value of future minimum lease payments over the term of the lease, are recognized as of the commencement date. Leases with an initial lease term of twelve months or less are classified as short-term leases and are not recognized in the balance sheets unless the lease contains a purchase option that is reasonably certain to be exercised.

Lease terms, discount rate, variable lease costs and future minimum lease payment determinations require the use of judgment and are based on the facts and circumstances related to the specific lease. Lease terms are generally based on their initial non-cancelable terms, unless there is a renewal option that is reasonably certain to be exercised. Various factors, including economic incentives, intent, past history and business needs are considered to determine if a renewal option is reasonably certain to be exercised. The implicit rate in a lease agreement is used when it can be determined to value the lease obligation. Otherwise, the Company’s incremental borrowing rate, which is based on information available as of the lease commencement date, including applicable lease terms and the current economic environment, is used to determine the value of the lease obligation.

Allowance For Doubtful Accounts*:*The Company recognizes an allowance for losses on trade and other accounts receivable in an amount equal to the estimated probable losses net of recoveries. The current expected credit loss model requires the recognition of lifetime expected credit losses at each reporting date, considering past events, current conditions, and reasonable forecasts. In assessing the credit quality of our portfolio, management utilizes a provision matrix that classifies trade receivables by customer type and age of receivable. Government and education sector receivables carry a low risk, while a higher risk is attributed to the remaining receivables as their aging progresses. For receivables with questionable collectability, a specific reserve is assigned. The estimated credit losses are a reflection of these factors, with the matrix applying percentages to the receivables based on their risk profile, adjusted for current and expected future conditions.

The allowance for notes receivable was $0 and $99,022 as of September 30, 2025 and December 31, 2024, respectively. The note receivables have collateral in certain mining permits which are strategic to our subsidiary, Knott County Coal (KCC). The timing of payment on the note is uncertain resulting in a full allowance for the note.

Inventory:* *Inventory consists of mined coal and is stated at the lower of cost (first in, first out method) or net realizable value.

Stock-based Compensation*:*Stock-based compensation to employees is accounted for under ASC 718, Compensation-Stock Compensation. Stock-based compensation expense related to stock awards granted to an employee is recognized based on the grant-date estimated fair values of the awards using the Black Scholes option pricing model (“Black Scholes”). The value is recognized as expense ratably over the requisite service period, which is generally the vesting term of the award. We adjust the expense for actual forfeitures as they occur. Stock-based compensation expense is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided.

Black-Scholes requires a number of assumptions, of which the most significant are expected volatility, expected option term (the time from the grant date until the options are exercised or expire) and risk-free rate. Expected volatility is determined using the historical volatility for the Company. The risk-free interest rate is based on the yield of US treasury government bonds with a remaining term equal to the expected life of the option. Expected dividend yield is zero because we have never paid cash dividends on common shares, and we do not expect to pay any cash dividends in the foreseeable future.

Earnings Per Share*:*The Company’s basic earnings per share (EPS) amounts have been computed based on the average number of shares of common stock outstanding for the period and include the effect of any participating securities as appropriate. Diluted EPS includes the effect of the Company’s outstanding stock options, restricted stock awards, restricted stock units and performance-based stock awards if the inclusion of these items is dilutive.

***Segment Information:***The Company’s operations include corporate and three operating segments. The Company’s Chief Executive Officer, as its chief operating decision maker (“CODM”), manages and allocates resources to the operations of the Company on a consolidated basis. The CODM assesses performance and allocates resources based on the Company’s consolidated statements of operations and key components and processes of the Company’s operations are managed centrally. Segment asset information is not used by the CODM to allocate resources. This enables our Chief Executive Officer to assess our overall level of available resources and determine how best to deploy these resources across projects to monitor and evaluate overall company performance, allocating resources, and establishing management compensation in line with our long-term company-wide strategic goals.

New Accounting Pronouncements*:*Management has determined that the impact of the following recent FASB pronouncements will not have a material impact on the financial statements.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses. The guidance in ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the statement of operations where such expenses are included. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied prospectively to reporting periods after the effective date or retrospectively to all periods presented in the financial statements. The Company is currently evaluating the provisions of this guidance and assessing the potential impact on the Company’s financial statement disclosures.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 - Segment Reporting (ASC 280): Improvements to Reportable Segment Disclosures, which enables investors to better understand an entity’s overall performance and assess potential future cash flows through improved reportable segment disclosure requirements. The amendments enhance disclosures about significant segment expenses, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. ASU 2023-07 is effective for annual periods beginning after December 15, 2023. The Company adopted ASU No. 2023-07 on December 31, 2024. The adoption of the standard did not result in any significant disclosure changes in the Notes to the Consolidated Financial Statements.

No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the consolidated financial statements.

NOTE 2 - PROPERTY AND EQUIPMENT

As of September 30, 2025 and December 31, 2024, property and equipment were comprised of the following:

Depreciation expense amounted to $516,373 and $568,914 for three months ended September 30, 2025 and September 30, 2024, respectively. Depreciation expense amounted to $1,541,860 and $1,638,999 for nine months ended September 30, 2025 and September 30, 2024, respectively. Amortization of mining rights amounted to $303,917 and $307,970 for three months ending September 30, 2025 and 2024, respectively. Amortization of mining rights amounted to $911,753 and 926,949 for nine months ending September 30, 2025 and 2024, respectively.

The estimated useful lives are as follows:

NOTE 3 – INVESTMENTS IN TRADING SECURITIES

Investments (all level 1 fair value measurements) in trading securities consist of U.S. government and agency securities and fixed income funds that are by the Company or held in trusts related to the Company’s tax-exempt bonds. These investments held by a trust related to the Company’s tax-exempt bonds are classified as restricted investments on the accompanying balance sheets. All other securities are classified as short-term investments on the accompanying balance sheet. The short-term investment securities are classified as trading securities and, accordingly, the unrealized gains and losses are recorded in current period earnings or loss.

The Company’s investments in securities consisting of fixed income funds are as follows:

The fair value of investments held as of September 30, 2025 consist of approximately $347,000 in U.S. Treasuries, and $4,500,000 in a bank certificate of deposit. The fair value of investments held as of December 31, 2024 consist of approximately $151,253,000 in U.S. Treasuries, $4,500,000 in a bank certificate of deposit and $587,000 in fixed income funds. There were no investments with unrealized losses that have been owned for more than or less than a year. There were no investments with unrealized losses that have been owned for more than or less than a year.

The debt securities outstanding as of September 30, 2025 have a maturity date of May 31, 2038.

NOTE 4 – RIGHT OF USE ASSETS AND LEASES

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use assets (“ROU”), operating lease liabilities, and operating lease liabilities, non-current. Finance leases are included in right-of-use assets, finance lease liabilities, and finance lease liabilities, non-current. Lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As substantially all of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at lease commencement date in determining the present value of future payments. Incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located. The ROU assets also include any prepaid lease payments made and initial direct costs incurred and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease, which is recognized when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Operating leases:

ARC’s principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038. We pay $8,954 per month in rent for the office space and the lease expires in June 2034. The rent is subject to escalation payments on an annual basis.

ReElement leases office space at 1716 E Pleasant Street, Noblesville, Indiana 46060 with a current monthly rent payment of $5,224. The lease agreement expires in November 2028 and is subject to escalation payments on an annual basis.

Operating leases – related party:

KCC, a subsidiary of AIC, rents office space from LRR at 11000 Highway 7 South, Kite, Kentucky 41828 with monthly rent of $1,702 and a lease expiration of December 31, 2029.

Electrified Materials Corporation leases office space at 1845 Highway 15 South, Hazard, Kentucky 41701 from LRR with a current monthly rent payment of $263. The lease agreement expires in December 2028.

Electrified Materials Corporation leases outdoor storage space from LRR in Noblesville, Indiana at a monthly rent rate of $20,000. The lease expires in December 2028.

Electrified Materials Corporation leases commercial production, office and outdoor storage space at 3 from LRR at 611 South Adams Street, Marion, Indiana at a current monthly rate of $20,559. The lease expires in December 2028 and is subject to escalating payments on an annual basis.

Finance lease – related party

ReElement leases approximately 316,000 square feet of commercial space from LRR, a related party, for its processing facility at 3301 South Adams Street, Marion, Indiana. The current monthly rent payment is $115,773. The lease expires in May of 2063 and is subject to escalation payments on an annual basis.

The Company has not made any payments on the related party finance or operating leases as of September 30, 2025, and the unpaid balance, of $1.9 million, has been added back into the current portion of operating and finance lease liabilities.

The components of lease expense included on the Company’s statements of operations, inclusive of the related party component were as follows:

The components of lease expense included on the Company’s statements of operations, inclusive of the related party component were as follows:

Other information related to leases is as follows:

The future minimum lease payments required under leases as of September 30, 2025 were as follows:

NOTE 5 - RELATED PARTY TRANSACTIONS

Effective January 1, 2022, the Company amended a Contract Services Agreement with Land Betterment Corp, an entity controlled by certain members of the Company’s management who are also directors and shareholders. The amended contract terms state that service costs are passed through to the Company with a 12.5% mark-up and a 50% share of cost savings. The agreement covers services across all of the Company’s properties. For the nine months ended September 30, 2025 and 2024, the amounts incurred under the agreement amounted to $764,542 and $4,216,528, respectively. The amount paid for the nine months ended September 30, 2025 and 2024 amounted to $893,995 and $4,966,536, respectively. As of September 30, 2025 and December 31, 2024, the amount due under the agreement amounted to $1,554,159 and $1,683,612, respectively. These project management services were all payable as of September 30, 2025 and 2024.

The Company is the holder of 2,000,000 LBX Tokens with a par value of $250 for each token. The token issuance process is undertaken by a related party, Land Betterment, and is predicated on proactive environmental stewardship and regulatory bond releases. As of September 30, 2025 and December 31, 2024, there is no market for the LBX Token and therefore no value has been assigned.

On June 11, 2020 the Company purchased $1,494,570 of secured debt including accrued interest that had been owed to Samuel Coal Holding Corp., by its operating subsidiary, Samuel Coal Corp. As a result of the transaction, the Company became the creditor on the four notes. The notes are in default and have been fully impaired due to collectability uncertainty as of December 31, 2022.

On October 24, 2016, the Company sold certain mineral and land interests to a subsidiary of an entity, Land Resources & Royalties, LLC (“LRR”), owned by members of the Company’s management. LRR leases various parcels of land to AIC and engages in other activities creating miscellaneous income. The consideration for the transaction was a note in the amount of $178,683. The note bears no interest and is due in 2026. As of September 30, 2025 and December 31, 2024, amounts owed to LRR totaled $0 and $0, respectively.

The Company was the sponsor of American Opportunity Ventures LLC (“AMAO”) a blank check company organized on January 20, 2021 and effectuated its business combination with Royalty Management Corporation (“RMCO”) on October 23, 2023 and at that point changed its name to Royalty Management Holding Corporation. The Company provided AMAO with money as needed for working capital needs. The advances from the Company are non-interest bearing and payable upon demand by the Company. No cash advances were made as of September 30, 2025 and December 31, 2024. As of September 30, 2025 and December 31, 2024, the Company had a balance of $741,243 due from RMCO.

On January 13, 2023, ReElement Technologies Corporation (“RLMT”), a subsidiary of the Company, entered into a Line of Credit Agreement with LRR in the amount of $1,100,000 (the “Line of Credit”). Refer to Note 8 for further information on the convertible promissory notes.

As further described in Note 4, RLMT is thelessee under a 30 year lease agreement with LRR and Electrified Materials Corporation is the lessee under three commercial leases with LRR.

On January 22, 2025 and March 4, 2025 the Company entered into an agreement to settle outstanding accounts payable to Land Betterment Corp. of $332,500 and $1,063,040, respectively through the issuance of equity. As a result, the liability was extinguished and reclassified to additional paid-in capital. The transaction was accounted for as a non-cash financing activity and is reflected as such in the statement of cash flows for the nine months ended September 30, 2025.

On February 28, 2025, the Company entered into an agreement to settle outstanding accounts payable to LRR of $84,807 through the issuance of equity. As a result, the liability was extinguished and reclassified to additional paid-in capital. The transaction was accounted for as a non-cash financing activity and is reflected as such in the statement of cash flows for the nine months ended September 30, 2025.

NOTE 6 - INVESTMENTS IN OTHER ENTITIES - RELATED PARTIES

The Company accounts for its investments and membership interest in other entities under the equity method of accounting if the Company has the ability to exercise significant influence, but not control, over the entity. Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investments may not be recoverable.

Royalty Management Co.

During January 2021, the company invested $2,250,000 for 50% ownership and became the managing member of American Opportunity Venture, LLC. (AOV) It has been determined that AOV is a variable interest entity and that the Company is the primary beneficiary, therefore AOV has been consolidated into the Company’s financial statement. As such, AOV’s sole investment in Royalty Management Co (RMCO) will be accounted for using the equity method of accounting. The sole investment was initially in American Acquisition Opportunity Inc (AMAO) a SPAC that closed its reverse merger with RMCO effective October 31, 2023. The Company recognizes the earnings or losses on a three-month lag to ensure consistency and timely filling of the Company’s financial statements. As of September 30, 2025 and December 31, 2024 the Company held 3,076,500 shares of Class A common stock in RMCO.

Novusterra, Inc.

On March 31, 2021, the Company entered into a Graphene Development Agreement with Novusterra, Inc (Novusterra), a related party, that provided a nonexclusive sublicense for fifty percent (50%) of the operating profits from Novustera’s Graphene manufacturing and marketing business activity. As part of the agreement, Novusterra’s Chairman of the Board of Directors at the time was replaced by the Company’s Mark Jensen, Chief Executive Officer and Chairman of the Board of Directors.

On August 30, 2022, we entered into a purchase agreement to sell the exclusive rights of the patent patents included in the Graphene Development Agreement for 4,000,000 common shares of Novusterra with a fair market value of $1,784,000 in stock of Novusterra. As part of the sale of the exclusive rights to the patents, Andrew Weeraratne resigned as director and CEO of Novusterra and Gregory Jensen, the Company’s general counsel, joined Novusterra as CEO and Director and Mark Jensen resigned as Chairman of the Board of Directors. Pursuant to the purchase agreement, Novusterra is no longer obligated to pay the Company fifty percent (50%) of the operating profits from their Graphene manufacturing and marketing business. However, Novusterra is still obligated to pay the Company ten percent (10%) of all revenue from the exclusive sublicense with Kenai Defense Company, LLC and for the Department of Defense under the contract that was transferred from the Company to Novusterra. Any subsequent contracts entered into by Novusterra with Kenai Defense Company, LLC and for the Department of Defense will have no future revenue allocations to the Company.

It has been determined that Novusterra is a variable interest entity and that the Company is not the primary beneficiary. As such, the investment in Novusterra has been accounted for using the equity method of accounting.

Effective March 6, 2024, the Company issued a special dividend to all stockholders on record of 91% of the Company’s ownership in Novusterra, Inc. resulting in the Company to receive 9% of future cash flows and holding 1,417,500 common shares of Novusterra, Inc. Due to the Company’s new ownership percentage in Novusterra, Inc. the investment is accounted for using the cost method of accounting.

As of September 30, 2025 and December 31, 2024, the carrying value of the investment was $0.

FUB Mineral LLC

On October 1, 2021, the Company contributed $250,000 for 23% ownership of FUB Mineral LLC (FUB). Simultaneously the Company issued a promissory note to FUB for $350,000 that was fully repaid as of April 15, 2022. On February 2, 2022, the Company issued a new promissory note for $535,000 to FUB with an interest rate of 10% and maturity date of February 1, 2023, which has been extended by the Company through the end of August 2024. As of September 30, 2025 and December 31, 2024, the Company had a note receivable balance of $0.

Advanced Magnet Lab, Inc

On December 21, 2022 the Company issued a convertible promissory note to Advanced Magnet, Inc. (“AML”) for $280,000 with a 10% interest rate that compounds monthly. The Company’s Chief Executive Officer is the director of AML. The convertible promissory note may be prepaid at any time. The Company has the option to convert the principal amounts of the convertible promissory note at a share price of $1.50 per share. The Company has not recorded any interest income related to this note due to the income deemed not probable and has held the investment at cost, which the Company expects to receive common stock upon conversion for the value of the principal balance. As of September 30, 2025 and December 31, 2024, the Company had a note receivable balance, net of allowance of $0 and $280,000, respectively.

NOTE 7 – DEBT

Current portion of long-term debt

On September 25, 2017, the Company entered into an equipment purchase agreement, which carries 0% interest with an unaffiliated entity (“September 2017 Note”) to purchase certain underground mining equipment for $350,000. Monthly payments of $20,000 were required until paid in full. The note matured on September 25, 2019 and is secured by the equipment. As of September 30, 2025 and December 31, 2024, the note is in default with a principal balance of $181,736.

On June 3, 2022, the Company issued a $2,500,000 promissory note (“June 2022 Note”) at 5% interest, maturing May 27, 2023. As of September 30, 2025 and December 31, 2024, the loan was in default. As of September 30, 2025 and December 31, 2024, the principal balance was $1,138,005 and $1,082,728 and the accrued interest balance was $315,149 and $259,872, respectively. For the three months ended September 30, 2025 and 2024, the interest expense was $28,688 and $25,969 respectively. For the nine months ended September 30, 2025 and 2024, the interest expense was $83,965 and $76,006 respectively.

On April 7, 2023, the Company issued a $1,381,250 promissory note (“April 2023 Note”) at 0% interest, maturing March 31, 2024. As of September 30, 2025 and December 31, 2024, the loan was in default. As of September 30, 2025 and December 31, 2024, the principal balance was $498,736 and the accrued interest balance was $0. For the nine months ended September 30, 2025 and 2024, the interest expense was $0.

**** - Total Outstanding = Principal + Interest as of September 30, 2025 and December 31, 2024***

Bonds payable, net

On May 31, 2023, the West Virginia Economic Development Authority (“Issuer”) issued $45 million in Solid Waste Disposal Facility Revenue Bonds, Series 2023 (“2023 Tax Exempt Bonds”) under an Indenture of Trust dated June 8, 2023 with UMB Bank N.A. (“Trustee”). The bonds are payable solely from Company payments under a Loan Agreement, evidenced by a Note to the Trustee. Proceeds financed acquisition, construction, and equipping of solid waste facilities in Wyoming County, WV, plus capitalized interest and issuance costs.

The bonds bear 9% interest and mature June 8, 2038.

They are redeemable:

(i)at the Issuer’s option, per Company direction, starting June 1, 2030—at 103% through May 31, 2031; 102% through May 31, 2032; 101% through May 31, 2033; and 100% from June 1, 2033 onward, plus accrued interest;

(ii) at par plus accrued interest from excess proceeds, as detailed in the Indenture.

Company obligations under the Loan Agreement are:

(i) secured by first priority liens on most real property and assets (excluding accounts receivable and inventory), subject to exceptions and permitted liens;

(ii) jointly and severally guaranteed by Subsidiary Guarantors, subject to exceptions.nThe Loan Agreement includes affirmative covenants: maintaining bond rating, proper records, adding guarantors when required, insurance procurement, and preserving legal existence and rights. Negative covenants restrict collateral release, mergers, asset dispositions, and actions risking tax-exempt status.

Events of default include: nonpayment (with cure periods), bankruptcy, material misrepresentations, and cross-defaults to the Indenture, guaranty, or related documents.

As of September 30, 2025 and December 31, 2024, the Company was not in compliance with certain bond provisions, constituting an event of default. The bonds are classified as current liabilities.

On March 28, 2024, the Company closed a Bond Purchase Agreement with Hilltop Securities Inc. (“Underwriter”) and Knott County, KY (“Issuer”) for $150 million in Industrial Building Revenue Bonds (Solid Waste Project), Series 2024 (“Bonds”). Proceeds will fund ReElement’s Kentucky Lithium refining facility, designed for 15,000 metric tons/year of battery-grade lithium carbonate and/or hydroxide. Bonds were sold to “Qualified Institutional Buyers” under Rule 144A or “Accredited Investors” under Regulation D of the 1933 Act.

These bonds bear 4% interest and mature March 28, 2044.

The Company accounts for investment income and interest expenses related to the tax-exempt bonds that are restricted for payment of project costs by capitalizing the net amount each period related to qualifying expenditures to construction in progress per ASC 835-20-30-11.

The outstanding net balance on the bonds was $193,453,241 and $193,366,505 as of September 30, 2025 December 31, 2024 respectively.

Convertible Promissory Notes

From October 2024 through September 2025, ReElement issued forty-nine convertible promissory notes (“Notes B-SS”) to unaffiliated investors. These notes mature between October and September of 2027 and bear 12.0% annual interest, compounded annually. In the event of default, the outstanding principal and accrued interest bear 13.5% annual interest, compounded annually, until paid or cured. Unless converted, all principal and accrued interest are due on the Maturity Date. Notes B-SS are convertible into ReElement common stock at the holder’s election, based on a fully diluted valuation of $150,000,000.

As of September 30, 2025 and December 31, 2024, Notes B-SS had an outstanding principal balance of $6,954,956 and $500,250, respectively, and accrued interest of $172,780 and $17,678, respectively.

The following tables reflects a summary of the outstanding principal and accrued interest by each lender and their respective maturity date as of September 30, 2025 and December 31, 2024:

**** - Total Outstanding = Principal + Interest as of September 30, 2025 and December 31, 2024**

Convertible Promissory Notes – Related party

In 2023, ReElement Technologies LLC (“ReElement”) entered into multiple Convertible Promissory Note agreements (“Note A”) with Land Resources & Royalties LLC (“LRR”) in the aggregate principal amount of $486,556. The notes accrued interest at a rate of 4.77% per annum, compounded annually, on the outstanding principal balance. All outstanding principal and accrued interest were due and payable in full on the maturity date of January 1, 2025. As of December 31, 2024, the outstanding balances of the notes, including accrued interest, were converted into ReElement’s equity pursuant to the terms of the agreement.

In 2024, ReElement entered into additional Convertible Promissory Notes with LRR (“Note A”) in the aggregate amount of $1,611,485. Each Convertible Promissory Note carries a three-year term from the respective effective date. The Convertible Promissory Notes mature February through December 2027.

The Convertible Promissory Notes carry an annual interest rate of 10%, compounded quarterly. For any Note issued on a date other than the last day of a calendar quarter, interest will be calculated for the stub period between the issuance date and the next quarter-end. In the event of default, the interest rate will increase to 13.5% per year, compounded quarterly, and will apply from the date of default until the Convertible Promissory Notes are fully paid or the default is remedied. Additionally, by mutual agreement between LRR and the Company, any interest due can be added to the Note’s principal and deferred until maturity date.

The Promissory Note’s principal amount, along with any accrued interest, is due in full upon the Note’s maturity date or in the event of default.

The Convertible Promissory Notes entered into with LRR are subject to a conversion feature. If ReElements completes a round or series of a capital raise in the aggregate amount of a minimum of $7,000,000 in cash (the “Capital Raise”), then the Promissory Notes and all accrued interest outstanding shall be immediately and automatically converted to Common Stock of the ReElements (such date, the “Conversion Date”) at the predetermined conversion price which is equal to the same per-share price as the investment under the Capital Raise.

As of September 30, 2025 and December 31, 2024, Note A had an outstanding principal balance of $1,432,522 and $1,611,166, respectively, and accrued interest of $101,893 and $59,213, respectively.

NOTE 8 – STOCKHOLDERS’ EQUITY

Common Stock Option Transactions

A 2016 Stock Incentive Plan (2016 Plan) was approved by the Board during January 2016. The Company may grant up to 6,363,225 shares of Series A Preferred stock under the 2016 Plan. The 2016 Plan is administered by the Board of Directors, which has substantial discretion to determine persons, amounts, time, price, exercise terms, and restrictions of the grants, if any. The options issued under the 2016 Plan vest upon issuance.

A new 2018 Stock Option Plan (2018 Plan) was approved by the Board on July 1, 2018 and amended on July 16, 2020. The Company may grant up to 4,000,000 shares of common stock under the 2018 Plan. The 2018 Plan is administered by the Board of Directors, which has substantial discretion to determine persons, amounts, time, price, vesting schedules, exercise terms, and restrictions of the grants, if any.

Total stock-based compensation expense for grants to officers, employees and consultants was $716,463 and $956,816 for the three months ended September 30, 2025, and 2024, respectively, which was charged to general and administrative expense. Total stock-based compensation expense for grants to officers, employees and consultants was $1,827,275 and $1,942,945 for the nine months ended September 30, 2025, and 2024, respectively, which was charged to general and administrative expense.

As of September 30, 2025, the company has $4,281,018 of unrecognized compensation cost related to unvested stock options granted and outstanding, net of estimated forfeitures. The cost is expected to be recognized on a weighted average basis over a period of approximately five years.

During the three months ended September 30, 2025, employees exercised 880,000 stock options through a cashless exercise arrangement. Under this method, a portion of the exercised shares was withheld to cover the exercise cost, resulting in the net issuance of shares to employees. The total number of options granted during the year was 314,000.

NOTE 9 – CONTINGENCIES

In the course of normal operations, the Company is involved in various claims and litigation matters that management intends to defend. The range of loss, if any, from all potential claims cannot be reasonably estimated. However, management believes the ultimate resolution of matters not disclosed below will not have a material adverse impact on the Company’s business or financial position.

American Infrastructure Legal Proceedings

The Kentucky Energy Cabinet, the Kentucky Department for Natural Resources and the Kentucky Division of Mine Reclamation and Enforcement have assessed claims totaling $2,189,000 that American Infrastructure Corporation (“AIC”) has accrued. Claims assessed by the Mine Health Safety Administration totaling $689,000 and have also been accrued by AIC. McCoy Elkhorn LLC (McCoy) and Deane Mining LLC (Dean) have received notices of intent to place liens for amounts owed on federal excise taxes. The amounts associated with the notices totaling $625,000 have been accrued.

In November of 2023 a court entered into an order granting summary judgment against AIC in connection with a lease dispute in which the plaintiff alleges that the defendants failed to diligently mine coal in accordance with the terms of the lease and did not pay minimum royalties owed under the agreement. A final judgment was entered into during 2024 against the defendant, who is currently appealing the decision and pursuing post-judgment collection efforts. The case is being appealed and $2,000,000 has been accrued for this potential loss. The Company is actively defending the claim and is engaged in efforts to reach a favorable out-of-court settlement.

In 2023, Dean was given a judgement due to a lease dispute, in which the plaintiff alleges trespass, conversion, and civil conspiracy against the defendants. A judgment has been entered against Dean, and management is currently appealing the decision. Management has accrued $5,499,836 has for this potential loss using an interest rate to calculate interest of 6%.

The Company also has a number of unpaid legal judgments for amounts that plaintiffs claim are due for services or goods provided to the Company that are accrued and total approximately $5,295,862 and $3,400,000 as of September 30, 2025 and December 31, 2024, respectively, related to unpaid legal judgments. These amounts primarily represent finalized judgments and settlements rendered by courts or arbitration panels for services or goods previously provided to the Company for which payment has not yet been made.

NOTE 10 – SEGMENT INFORMATION

In its operation of the business, management, including our chief operating decision maker, who is also our CEO, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis not consistent with GAAP.

For all of the segments, the CODM uses segment operating income (loss) in the annual budgeting and forecasting process. The CODM considers budget-to-actual variances on a monthly basis for both profit measures when making decisions about allocating capital and personnel to the segments. The CODM also uses segment operating income to assess the performance for each segment by comparing the results and return on assets of each segment with one another.

During the periods presented, we reported our financial performance based on the following segments: Corporate, American Infrastructure (AIC), ReElements (RLMT) and Electrified Materials Corporation (EMC).

Our reportable segments are described below.

Corporate - Costs are incurred at a corporate level and allocated to our segments. These allocated costs generally include corporate overhead and administrative support costs incurred as a part of a corporate program. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated and is generally based on relative gross margin or relative headcount.

AIC - Operations primarily focused on the extraction, processing, transportation, and distribution of coal for a variety of industries, with a primary focus on metallurgical quality coal to the steel industry.

RLMT - provider of final-stage, separated and purified rare earth and critical elements to the electrification industry supply chain. Our products, separated and purified rare earth and critical elements, are used to manufacture permanent magnets and battery materials for high efficiency electric motors and lithium-ion batteries.

EMC - Aggregator and processor of used metals for recycling into new steel-based products for the recovery and sale of recovered metal and steel. From inception to date the majority of company activities and revenue have been focused on the aggregation and sales of scrap steel materials. The company has yet to commence meaningful operations in battery, magnet and advanced materials recycling.

The accounting policies of our reportable segments are the same as those described in the “Summary of Significant Accounting Policies” for the Company.

Revenue and costs are generally directly attributed to our segments. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services, which can include allocation based on actual prices charged, prices when sold separately, or estimated costs plus a profit margin. Cost of revenue is allocated in certain cases based on a relative revenue methodology. Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin.

The table below presents information about reported segments for the three and nine months ending:

A reconciliation of total segment revenues to total consolidated revenues and of total segment gross margin and segment operating income (loss) to total consolidated income (loss) before income taxes, for the three months ended September 30, 2025 and 2024, is as follows:

Assets are not allocated to segments for internal reporting presentations. A portion of depreciation and amortization is included with various other costs in an overhead allocation to each segment. It is impracticable for us to separately identify the amount of amortization and depreciation by segment that is included in the measure of segment profit or loss.

Total assets, by segment were as follows:

NOTE 11 - SUBSEQUENT EVENTS

On October 13, 2025, the Company entered into securities purchase agreements with certain investors for the private placement of 9,480,282 shares of common stock at $3.55 per share.

On October 15, 2025, the Company entered into securities purchase agreements with certain investors pursuant to which it agreed to issue and sell, in a private placement offering, an aggregate of 2,661,764 shares of common stock at a purchase price of $5.10 per share and pre-funded warrants to purchase up to 5,181,374 shares of common stock at an exercise price of $0.0001 per share, at a purchase price of $5.0999 per warrant.