ALOY

REALLOYS INC. (ALOY) - 10-Q Summary for Period Ended March 31, 2026

Business Context and Reporting Period

This Quarterly Report covers the three months ended March 31, 2026. REALLOYS INC. is a development-stage company building a vertically integrated North American rare earth to high-performance neodymium iron boron (NdFeB) magnet supply chain for U.S. Protected Markets (Defense, Aerospace, Energy). The reporting period is significantly impacted by the consummation of a reverse recapitalization with Blackboxstocks Inc. on February 24, 2026, which resulted in the Company trading on Nasdaq under the symbol "ALOY." The financial statements reflect the combined entity, including 33 days of Blackbox operations and the full quarter of PMT Critical Metals Inc. (PMTCM) operations.

Key Financial Metrics

Note: Q1 2025 figures reflect pre-merger operations only and are not comparable to the post-merger consolidated results.

Material Changes vs. Prior Period

• Revenue Generation: The Company recorded $706,000 in revenue, primarily from PMTCM's Euclid Magnet Facility sales to the Defense Logistics Agency and DOE's AMES National Laboratory, plus subscription revenue from Blackbox. This is an increase from $0 in Q1 2025.
• Expense Surge: Operating expenses increased to $88.4 million from $0.9 million. This is driven by non-cash items: $81.8 million in stock-based compensation (including $32.9 million for new board members), $6.4 million impairment of the EVTEC investment, and $9.2 million accretion on Series C Preferred Stock.
• Liquidity Improvement: Cash balances increased from $2.8 million to $42.5 million (plus $7.5 million restricted cash) due to a $46.8 million net proceeds public offering in March 2026 and the reverse recapitalization.
• Debt Reduction: Total liabilities decreased significantly from $56.0 million to $28.9 million, largely due to the conversion of $38.0 million in contingent consideration (Special Warrants) and SAFE liabilities into equity upon the merger.

Guidance, Outlook, and Risks

Management Commentary & Outlook: Management has reassessed the "Going Concern" status. Due to the successful March 2026 public offering, substantial doubt regarding the Company's ability to continue as a going concern has been alleviated for the next 12 months. However, the Company expects to incur continued operating losses and will require additional capital for long-term strategic growth, specifically for the Hoidas Lake mineral project and the commercial-scale metallization facility with the Saskatchewan Research Council (SRC).

Key Risks & Contingencies:

• Internal Controls: The Company identified material weaknesses in internal control over financial reporting, including insufficient accounting personnel, inadequate segregation of duties, and lack of formalized period-end controls. Disclosure controls were deemed ineffective as of March 31, 2026.
• Concentrated Voting Control: Following a subsequent event in May 2026, CEO Leonard Sternheim controls a substantial majority of voting power, classifying the Company as a "controlled company" under Nasdaq rules.
• Deconsolidation of Blackbox.io: In May 2026, the Company exercised an option to transfer Blackbox.io to a third party, resulting in the deconsolidation of the Blackbox.io subsidiary effective Q2 2026.
• Project Execution: Significant risks exist regarding the development of the Hoidas Lake mine, the expansion of the Euclid facility, and the execution of the SRC processing agreements, which involve non-binding capital commitments of approximately $71.3 million.

Investor Verification Checklist

• Verify Cash Position: Confirm the status of the $7.5 million restricted cash, which was returned to investors in April 2026 following the decision not to proceed with the potential investment.
• Review Internal Control Remediation: Monitor the progress of the remediation plan for material weaknesses in financial reporting, targeted for completion by the end of 2026.
• Assess SRC Commitments: Evaluate the non-binding nature of the $71.3 million capital commitments with the Saskatchewan Research Council and the Company's ability to fund these without further dilution.
• Monitor Deconsolidation Impact: Review the Q2 2026 financial statements for the impact of deconsolidating Blackbox.io and the resulting change in revenue streams.
• Check Contract Renewals: Verify the status of short-term government contracts (DLA, DOE) at the Euclid Magnet Facility, as future revenue depends on their renewal or expansion.