REALLOYS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except as noted and share and per share amounts)

Note 1 –Description of Business and Basis of Presentation

Description of Business

REalloys, Inc. (the “Company” or “REalloys”) is a development-stage company building a North American integrated rare earth to high-performance neodymium iron boron (“NdFeB”) magnet materials and magnet supply chain focused on meeting the demands of the protected markets of the United States, which includes the U.S. National Defense Stockpiles (“NDS”), Defense Industrial Base (“DIB”), Nuclear Industrial Base (“NIB”), robotics, electric aviation, and critical infrastructure industries. The Company trades on The Nasdaq Capital Market under the ticker symbol “ALOY.”

The Company has adopted a structured approach to building its North American rare earth to high performance NdFeB magnet materials and magnet supply chain through producing magnet materials and magnets that meet the performance requirements of US Protected Markets clients and building capacity to meet the demand of US Protected Market clients on a timetable to meet such demand

In line with this strategy, the Company initially acquired 100% of Strategic Metals Development Inc., on May 29, 2024, which owns 100% of the Hoidas Lake Rare Earth Element Project in Saskatchewan, Canada, which comprises 14 contiguous mineral claims totaling 12,522 hectares. The Company believes that the Hoidas Lake project has the potential to be a long-term North American source of rare earth materials as a primary feedstock for its magnet materials and integrated supply chain.

The Company also acquired PMT Critical Metals Inc. (“PMTCM”), on March 31, 2025, which became a wholly owned subsidiary, and which operates the Euclid Magnet Facility in Euclid, Ohio. The Euclid Magnet Facility produces rare earth metals and magnet materials for the Defense Logistics Agency, the U.S. Department of Energy’s AMES National Laboratory and industry clients, and the Company intends to expand production capacity to meet a portion of U.S. protected market demand.

The Company is continuing to evaluate additional opportunities to strengthen its integrated North American magnet and magnet materials supply chain and improve resiliency, capabilities and capacity.

Reverse Recapitalization

On February 24, 2026, the Company completed a reverse recapitalization transaction with Blackboxstocks Inc. (“Blackbox”) pursuant to the Agreement and Plan of Merger, as amended. For accounting purposes, REalloys was determined to be the accounting acquirer. The transaction was not a business combination under ASC 805 because substantially all of the fair value of Blackbox’s gross assets was concentrated in its developed technology platform. Accordingly, the transaction was accounted for as a reverse recapitalization: Blackbox’s assets and liabilities were recorded at their historical carrying values; no goodwill or intangible assets were recognized in connection with the transaction; the historical financial statements of REalloys became those of the combined entity; and the equity structure was retroactively restated to reflect the legal capital structure of Blackbox.

Following the close of the transaction, former REalloys stockholders owned approximately 92.2% of the outstanding common stock of the combined company, with former Blackbox stockholders owning approximately 7.8%. The Company commenced trading on The Nasdaq Capital Market under the symbol “ALOY” on February 25, 2026.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC applicable to interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation have been included. The unaudited Condensed Consolidated Financial Statements include the accounts of REalloys, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited financial statements and related notes included in the Company's Current Report on Form 8-K/A filed on May 12, 2026, and in Blackbox's Annual Report on Form 10-K for the year ended December 31, 2025.

Note 2 –Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in the notes to the audited financial statements included in the Company's Current Report on Form 8-K/A filed on May 12, 2026 (amending the Current Report on Form 8-K filed on February 25, 2026), and in Blackbox's Annual Report on Form 10-K for the year ended December 31, 2025, which is incorporated by reference into such Current Reports. There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2026 except as described below.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include, but are not limited to, accounting for the reverse recapitalization transaction, the valuation of equity instruments and stock-based compensation, the assessment of the recoverability of long-lived assets, including mineral properties, and the evaluation of the Company’s ability to continue as a going concern.

The accounting for payments under the Saskatchewan Research Council (SRC) arrangements requires judgment in determining whether amounts should be recorded as prepaid assets, research and development expense, project development expense, construction in progress, or property and equipment. This assessment depends on the nature of the underlying goods or services received, whether specific equipment or materials have been acquired, whether such equipment or materials have alternative future use, and whether costs are directly attributable to preparing a long-lived asset for its intended use.

Restricted Cash

Restricted cash consists of cash deposits that are not available for general corporate purposes due to contractual or other restrictions. The Company presents restricted cash together with cash and cash equivalents in the statement of cash flows and includes such amounts within current or non‑current assets on the consolidated balance sheets based on the expected timing of release of the restrictions.

As of March 31, 2026, restricted cash was $7.5 million and consisted of deposits received from prospective investors in connection with potential investment transactions. These deposits were subject to contractual conditions and were therefore not available for use in the Company’s operations. In April 2026, following a joint decision by the Company and the prospective investors not to proceed with the potential investments, the Company returned the full $7.5 million of restricted cash to the investors. Accordingly, no restricted cash balance remained outstanding subsequent to the return of the deposits.

The following table provides a reconciliation of cash and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows (in thousands).

Simple Agreements for Future Equity (SAFEs)

All outstanding SAFEs converted into shares of common stock upon the February 24, 2026 listing.

Investments — Equity securities without a readily determinable fair value (ASC 321)

The Company holds an investment in EVTEC Holdings Group Limited ("EVTEC"), a private UK-based automotive components manufacturer, acquired through the February 24, 2026 reverse recapitalization with Blackbox. The Company applies the measurement alternative for equity securities without a readily determinable fair value under ASC 321. Under this method, the investment is carried at cost minus impairment, plus or minus adjustments from observable price changes in orderly transactions for identical or similar investments of the same issuer See Note 4 – Blackbox Reverse Recapitalization.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, when control of goods or services is transferred to customers. PMTCM recognizes revenue from the sale of rare earth metals and magnet materials primarily under the output method or right-to-invoice practical expedient as production is completed and delivered to customers. Subscription revenue from the Blackbox trading analytics platform is recognized ratably over the subscription period on a straight-line basis.

Note 3 – Going Concern

In the Company’s previously issued interim financial statements for the period ended September 30, 2025, management concluded that substantial doubt existed about the Company’s ability to continue as a going concern.In connection with the preparation of the Company's issued Audited Consolidated Financial Statements for the year ending December 31, 2025, management reevaluated the Company’s liquidity position in accordance with ASC 205-40. The Company completed a public offering on March 9, 2026, generating net proceeds of approximately $46.8 million. Management performed the ASC 205-40 assessment by comparing projected baseline cash requirements for the twelve months following the issuance date against available liquidity. Baseline obligations (operating costs, lease payments, and contractual commitments that cannot be deferred or eliminated) are estimated to be substantially below available liquidity. Expenditures under the SRC agreements represent discretionary project spend capable of being sequenced or financed separately and were excluded from the baseline analysis. Based on this assessment, management concluded that substantial doubt about the Company’s ability to continue as a going concern did not exist. There has been no change in the circumstances or the assessment of the Company's ability to continue as a going concern in the preparation of these interim condensed consolidated financial statements.

The Company expects that additional capital will be required for longer-term strategic growth; however, this conclusion does not depend on any specific future financing transaction.

Note 4 – Blackbox Reverse Recapitalization

As described in Note 1 , on February 24, 2026, the Company completed its reverse recapitalization with Blackbox. The transaction was determined not to be a business combination under ASC 805 because the screen test was met: substantially all of the fair value of Blackbox’s gross assets was concentrated in a single group of identifiable assets (the developed technology platform underlying the Blackbox subscription service). As all of the gross asset value was concentrated in this single asset class, no further analysis was required and the acquired set was not considered a business.

Under reverse recapitalization accounting, the Company’s historical financial statements represent a continuation of REalloys (the accounting acquirer). Blackbox’s assets and liabilities were recorded at historical carrying values as of the closing date. No goodwill or intangible assets were recognized in connection with the transaction. The equity structure prior to the transaction has been retroactively adjusted to reflect the exchange ratio of 0.4129 (the number of Blackbox shares issued for each REalloys share).

The EVTEC Holdings Group Limited investment ("EVTEC"), held by Blackbox, was initially recorded at its historical carrying value of $8.4 million as of the closing date. Management performed a fair value assessment of the investment as of February 24, 2026 in accordance with ASC 820 and ASC 321. Based on that assessment which reflected the failure oftwo contemplated public-market transaction pathways, persistent operational disruption resulting from a cyber-attack on EVTEC's primary customer, reduced FY2026 revenue guidance, and concentrated customer exposure, management concluded that the fair value of the investment as of the closing date was approximately $2.0 million. An impairment of approximately $6.4 million was recognized at the merger date, reducing the carrying value to $2.0 million.

For further details on the reverse recapitalization's impact on equity see Note 8 and for impacts to stock-based compensation see Note 9.

Note 5 – Prepaid Expenses and Project Deposits

Prepaid expenses and project deposits consist primarily of the unamortized value of consulting service agreements settled through issuance of common stock and advance payments to the Saskatchewan Research Council pursuant to the Company's pilot metallization project. Under stock-based consulting arrangements, the grant-date fair value of common shares issued for future services is recorded as a prepaid asset and amortized over the applicable service period in accordance with ASC 718

On November 20, 2025, the Company entered into a series of strategic arrangements with SRC to develop capabilities in rare-earth processing and metallization. The arrangements include, among other matters, a pilot-scale processing arrangement designed to evaluate and define processing parameters for dysprosium and terbium metallization and a commercial-scale engineering and processing facility arrangement intended to support development of a commercial-scale metallization facility.

During the three months ended March 31, 2026, the Company paid deposits of $1.4 million related to the Pilot process and $1.0 million related to the commercial-scale metallization facility. As of March 31, 2026, the Company had not received equipment, goods, or services related to these deposits, and no equipment or facility assets had been delivered, commissioned, or placed into service. Accordingly, the Company recorded the $2.4 million as current prepaid deposits in the accompanying unaudited condensed consolidated balance sheet.

The Pilot project is intended to support pilot-scale process development and validation activities. The pilot process and related pilot equipment are expected to provide the technical information necessary to determine processing specifications, equipment configuration, operating parameters, and other requirements for the Company’s planned commercial-scale metallization facility. Amounts paid relating to the Pilot are expected to be recognized as research and project development expenses as the related services are performed, unless specific equipment, materials, or other assets are acquired that have an alternative future use and otherwise qualify for capitalization.

Amounts paid relating to the commercial-scale metallization facility are expected to be capitalized as construction in progress or property and equipment only when the Company receives or obtains control of identifiable equipment, materials, construction activity, or other directly attributable costs that qualify for capitalization. Until such time, advance payments are recorded as current prepaid deposits and assessed for recoverability each reporting period.

The agreements are time-and-materials arrangements, and total costs, timing, and scope remain subject to SRC work programs, procurement, technical results, and the Company’s approval of future expenditures. The Company has not recognized a liability for future amounts that may become payable under the arrangements because such amounts relate to future goods, services, or construction activities that had not been received or incurred as of March 31, 2026.

The following table presents prepaid expenses and project deposits as of March 31, 2026 and December 31, 2025 (in thousands).

Note 6 – Mineral Properties and Machinery and Equipment

The Hoidas Lake Rare Earth Element Project comprises 14 contiguous mineral claims totaling 12,522 hectares in Saskatchewan, Canada. The property is in the exploration and evaluation stage. Costs associated with acquisition of mineral properties are capitalized; exploration costs are expensed as incurred. No depletion has been recognized as the property has not been placed into production. Mineral claims remain in good standing through assessment credits with minimum required expenditures deferred through dates ranging from October 2027 to June 2029.

As of March 31, 2026, no impairment indicators were identified with respect to the Hoidas Lake mineral property or the Euclid Magnet Facility fixed assets. Depreciation expense for the three months ended March 31, 2026 was included in depreciation and amortization expense in the condensed consolidated statements of operations.

Machinery and equipment are recorded at cost and consist primarily of equipment and leasehold improvements. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The Company evaluates mineral properties and machinery and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Mineral properties and machinery and equipment were $50.8 million and $50.9 million as of March 31, 2026 and December 31, 2025, respectively.

The following table presents mineral properties and machinery and equipment as of March 31, 2026 and December 31, 2025 (in thousands)

Note 7 –Accrued Liabilities

Accrued liabilities consist primarily of accrued professional fees, including legal, accounting, and consulting services, as well as other general and administrative liabilities incurred in the normal course of business. Accrued liabilities were $2.1 million and $3.3 million as of March 31, 2026 and December 31, 2025, respectively.