Merger and JV dilution reshape Texas Mineral Resources (OTCQB: TMRC)
Texas Mineral Resources Corp. reported a net loss of about $1.05 million for the six months ended February 28, 2026, compared with roughly $0.47 million a year earlier, driven partly by a $0.50 million unrealized loss on marketable equity securities. The company remains an exploration-stage miner with no operating revenue and an accumulated deficit of about $46.16 million.
Total assets rose to approximately $4.41 million, including $0.79 million in cash and $2.98 million in marketable equity securities, and shareholders’ equity increased to about $4.27 million, supported by warrant exercises and contributed USAR stock. Despite a working capital surplus near $3.74 million, management discloses substantial doubt about the company’s ability to continue as a going concern because it cannot fund its share of Round Top cash calls and expects further dilution of its now roughly 18.4% interest in the project. The company has signed a Merger Agreement with USA Rare Earth, Inc., under which existing shareholders are slated to receive an aggregate of 3,823,328 USAR shares, subject to approvals and customary closing conditions.
Positive
- Shareholders’ equity increased to approximately $4.27 million at February 28, 2026, aided by $630,000 of warrant exercise proceeds and a non‑cash contribution of $3.48 million in USAR stock.
- The company realized liquidity by selling 157,686 USAR shares on March 10, 2026 for net proceeds of about $2.999 million, strengthening its cash resources pending the proposed merger.
- A signed Merger Agreement with USA Rare Earth, Inc. would convert all outstanding Texas Mineral Resources shares into a pro‑rata allocation of 3,823,328 USAR shares, potentially giving investors exposure to a larger, listed rare‑earth platform if the deal closes.
Negative
- Management discloses substantial doubt about the company’s ability to continue as a going concern, citing an accumulated deficit near $46.16 million, ongoing losses and limited ability to fund project obligations.
- The company lacks capital to meet Round Top cash calls, leading to dilution of its interest from 18.779% at August 31, 2025 to 18.422% at March 31, 2026, with further dilution expected in 2026.
- Round Top’s remaining estimated $10.52 million calendar‑2026 budget cannot currently be funded by Texas Mineral Resources, limiting its ability to benefit fully from any future project success.
- Disclosure controls and procedures remain not effective due to a continuing material weakness in internal control over financial reporting identified in the prior fiscal year.
Insights
Losses, funding strain and JV dilution are partially offset by a stock-for-stock merger path.
Texas Mineral Resources remains an exploration-stage company with no revenue and a six‑month net loss of about $1.05 million. Results were hurt by a $0.50 million mark‑to‑market loss on USAR shares, which are now sold for roughly $2.999 million in cash.
The balance sheet shows total assets of about $4.41 million and a working capital surplus near $3.74 million, but management highlights substantial doubt about continuing as a going concern. The company cannot fund its pro‑rata share of the Round Top budget of roughly $10.52 million for calendar 2026 and is accepting dilution instead.
Ownership in Round Top has already fallen to 18.505% at February 28 2026 and 18.422% at March 31 2026. A signed Merger Agreement with USA Rare Earth would convert all TMRC shares into a pro‑rata interest in 3,823,328 USAR shares if it closes, but the deal is subject to shareholder approval, closing conditions and a potential $3.25 million termination fee. Overall impact skews negative because of going‑concern uncertainty and ongoing dilution.
Key Figures
Key Terms
exploration stage financial
going concern financial
proportionate consolidation financial
cash calls financial
termination fee financial
Item 1300 of Regulation S-K financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact Name of Registrant as Specified in its Charter)
| (State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
|
|
||
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s Telephone Number, including Area Code)
(Former Name, Former Address and Former Fiscal
Year, if Changed Since Last Report)
Securities registered under Section 12(b) of the Exchange Act: None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ | Large accelerated filer | ☐ | Accelerated filer |
| ☐ | Smaller reporting company | ||
| Emerging growth |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐
Number of shares of issuer’s common
stock outstanding as of April 14, 2026:
Table of Contents
| Part I | Page | ||
| Item 1 | Financial Statements (Unaudited) | 3 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13 | |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 25 | |
| Item 4 | Controls and Procedures | 25 | |
| Part II | |||
| Item 1 | Legal Proceedings | 26 | |
| Item 1A. | Risk Factors | 26 | |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 27 | |
| Item 3 | Defaults upon Senior Securities | 27 | |
| Item 4 | Mine Safety Disclosures | 28 | |
| Item 5 | Other Information | 28 | |
| Item 6 | Exhibits | 29 | |
| Signatures | 32 | ||
TEXAS MINERAL RESOURCES CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| February 28, | August 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable equity securities | — | |||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Restricted investment | ||||||||
| Mineral properties, net | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Note payable, related party | ||||||||
| Total current liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Preferred stock, par value $ | — | — | ||||||
| Common stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
3
TEXAS MINERAL RESOURCES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six and Three Months Ended February 28, 2026 and February 28, 2025
(Unaudited)
| Six Months Ended | Three Months Ended | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Exploration costs | $ | $ | $ | $ | ||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER (EXPENSE) INCOME | ||||||||||||||||
| Interest expense | — | ( | ) | — | ( | ) | ||||||||||
| Change in value of equity securities | ( | ) | — | ( | ) | — | ||||||||||
| Other income | ||||||||||||||||
| Total other (expense) income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share: | ||||||||||||||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
4
TEXAS MINERAL RESOURCES CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Six Months Ended February 28, 2026 and February 28, 2025
(Unaudited)
| Additional | ||||||||||||||||||||||||||||
| Preferred Stock | Common stock | Paid-in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance at August 31, 2025 | — | $ | — | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Stock based compensation | — | — | — | |||||||||||||||||||||||||
| Common stock issued upon cashless exercise of options | — | — | ( | ) | — | — | ||||||||||||||||||||||
| Common stock issued upon exercise of options and warrants | — | — | — | |||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at November 30, 2025 | — | — | ( | ) | ||||||||||||||||||||||||
| Stock based compensation | — | — | — | |||||||||||||||||||||||||
| Common stock issued upon cashless exercise of options and warrants | — | — | ( | ) | — | — | ||||||||||||||||||||||
| Contribution of marketable equity securities | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at February 28, 2026 | — | $ | — | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Balance at August 31, 2024 | — | $ | — | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Stock based compensation | — | — | — | |||||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at November 30, 2024 | — | — | ( | ) | ||||||||||||||||||||||||
| Stock based compensation | — | — | — | |||||||||||||||||||||||||
| Issuance of detachable warrants | — | — | — | — | — | |||||||||||||||||||||||
| Net loss | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at February 28, 2025 | — | $ | — | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
5
TEXAS MINERAL RESOURCES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended February 28, 2026 and February 28, 2025
(Unaudited)
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock based compensation | ||||||||
| Accretion of debt discount | — | |||||||
| Change in value of equity securities | — | |||||||
| Changes in current assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of restricted investment | — | ( | ) | |||||
| Net cash used in investing activities | — | ( | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from exercise of common stock options and warrants | — | |||||||
| Proceeds from convertible notes and detachable warrants | — | |||||||
| Net cash provided by financing activites | ||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | ||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Interest paid | $ | — | $ | — | ||||
| Taxes paid | $ | — | $ | — | ||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Mineral properties acquired under note payable, related party | $ | — | $ | |||||
| Issuance of detachable warrants and discount on convertible notes | $ | — | $ | |||||
| Contribution of marketable equity securities | $ | $ | — | |||||
The accompanying notes are an integral part of these interim consolidated financial statements.
6
Texas Mineral Resources Corp.
Notes to Interim Consolidated Financial Statements
February 28, 2026
(Unaudited)
NOTE 1 – GENERAL
Exploration-Stage Company
Since January 1, 2009, Texas Mineral Resources Corp. (“we”, “us”, “our”, the “Company”) has been classified as an “exploration stage” company for purposes of Regulation S-K Item 1300 of the U.S. Securities and Exchange Commission (“SEC”). Under SEC Regulation S-K Item 1300, companies engaged in significant mining operations are classified into three categories, referred to as “stages” - exploration, development, and production. Exploration stage includes all companies that do not have established reserves in accordance with Item 1300. Such companies are deemed to be “in the search for mineral deposits.” Notwithstanding the nature and extent of development-type or production-type activities that have been undertaken or completed, a company cannot be classified as a development or production stage company unless it has established reserves in accordance with Item 1300.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements of Texas Mineral Resources Corp. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the SEC, and should be read in conjunction with the audited financial statements and notes thereto contained in our annual report on Form 10-K, for the year ended August 31, 2025, dated November 28, 2025, as filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended August 31, 2025, as reported in our annual report on Form 10-K, have been omitted.
Principles of Consolidation
The consolidated financial statements include the accounts of Texas Mineral Resources Corp., its wholly-owned subsidiary Standard Silver Corp. and its proportionate interest in the assets, liabilities, and operations of Round Top Mountain Development Company, LLC (“Round Top” or “RTMD”). All significant intercompany balances and transactions have been eliminated.
Going Concern
These financial statements have been prepared assuming that the Company will continue as a going concern. The Company has an accumulated deficit from inception through February 28, 2026, of approximately $46,157,000 and has yet to achieve profitable operations, and projects further losses in the development of its business.
At February 28, 2026, the Company had a working
capital surplus of approximately $
We do not have sufficient cash on hand to fund
our portion of the Round Top budget, being our portion of the Round Top cash calls, during our current fiscal year. We believe we have
sufficient capital to fund our estimated general and administrative expenses through August 31, 2026. Failure by the Company to fund
required cash calls to Round Top during the twelve-month period from the issuance date of these financial statements would result in
dilution to its membership interest in Round Top, which is
7
Texas Mineral Resources Corp.
Notes to Interim Consolidated Financial Statements
February 28, 2026
(Unaudited)
Segment Reporting
In accordance with ASC Topic 280 - “Segment Reporting (ASC 280)” the Company has determined that it has a single operating and reporting segment. As a result, the Company’s segment accounting policies are the same as described herein and the Company does not have any material intra-segment sales and transfers of assets. The Company’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer (the “CEO”). The CEO, with the Chief Financial Officer assesses the performance and makes operating decisions of the Company on a consolidated basis, based on the Company’s net increase/decrease in shareholder’s equity resulting from operations (“net income”/“net loss”). Company assets are not reviewed by the CODM at a different asset level or category, but at the consolidated level. As the Company’s operations are comprised of a single operating segment, the segment assets are reflected on the accompanying Consolidated Balance Sheets as “total assets” and the significant segment expenses are listed on the accompanying Consolidated Statement of Operations.
NOTE 2 – JOINT VENTURE ARRANGEMENTS
The Company accounts for its interest in RTMD using the proportionate consolidation method, which is an exception available to entities in the extractive industries, thereby recognizing its pro-rata share of the assets, liabilities, and operations of RTMD in the appropriate classifications in the financial statements.
NOTE 3 – MINERAL PROPERTIES
The following discussion under ” –
RTMD Mineral Properties” provides a history of the ownership and obligations of the Round Top Project, of which we, as of February
28, 2026, held a
RTMD Mineral Properties
August 2010 Lease
On August 17, 2010, the Company executed a new
mining lease with the Texas General Land Office covering Sections 7 and 18 of Township 7, Block 71 and Section 12 of Block 72, covering
approximately
Under the terms of the lease, Round Top is obligated
to pay the State of Texas a total lease bonus of $
| Per Acre Amount |
Total Amount |
|||||||
| September 2, 2025 – 2029 | ||||||||
In August 2025, Round Top paid the State of Texas
a delay rental to extend the term of the lease in an amount equal to $
8
Texas Mineral Resources Corp.
Notes to Interim Consolidated Financial Statements
February 28, 2026
(Unaudited)
November 2011 Lease
On November 1, 2011, the Company executed a mining
lease with the State of Texas covering approximately
| Per Acre Amount |
Total Amount |
|||||||
| November 1, 2025 – 2029 | ||||||||
In August 2025, Round Top paid the State of Texas
a delay rental to extend the term of the lease in an amount equal to $
March 2013 Lease
On March 6, 2013, the Company purchased the surface
lease at the Round Top Project, known as the West Lease, from the Southwest Wildlife and Range Foundation (since renamed the Rio Grande
Foundation) for $
October 2014 Surface Option and Water Lease
On October 29, 2014, the Company announced the
execution of agreements with the Texas General Land Office securing the option to purchase the surface rights covering the potential Round
Top project mine and plant areas and, separately, a groundwater lease. The option to purchase the surface rights covers approximately
The ground water lease secures the right to develop
the ground water within a
Other Mineral Properties
Potential Santa Fe Gold Corporation/Alhambra Project
In November 2021, the Company entered into a mineral
exploration and option agreement with Santa Fe Gold Corporation (“Santa Fe”). Under the option agreement, the Company has
the right to pursue a joint venture arrangement with Santa Fe to jointly explore and develop a target silver property to be selected by
the Company among patented and unpatented mining claims held by Santa Fe within the Black Hawk Mining District in Grant County, New Mexico.
Completion of a joint venture agreement, if any, is subject to the successful outcome of a multi-phase exploration plan leading to a bankable
feasibility study to be undertaken in the near future by the Company and there can be no assurance that any joint venture agreement will
be completed. Under the contemplated terms of the proposed joint venture agreement, the Company would be project operator and initially
own
9
Texas Mineral Resources Corp.
Notes to Interim Consolidated Financial Statements
February 28, 2026
(Unaudited)
Under the terms of the option agreement, the Company
plans to conduct a district-wide evaluation among the patented and unpatented claims held by Santa Fe, as well as the area of interest,
consisting of geologic mapping, sampling, trenching, radiometric surveying, geophysics, drilling and/or other methods as warranted. Based
on the district-wide evaluation, the Company would designate a “project area or areas,” the size or sizes of which will be
decided at the time, and commence development work. The property covered in the option agreement is approximately
Carlise Mine
In December 2024, Dan Gorski, our chief executive
officer and a director, assigned all of his ownership interest in the Carlisle mine and related real estate to a wholly-owned subsidiary
of the Company in consideration for a $
| ● | Carlisle Millsite, patent No. 280, described as Section 12, township 17S, range 21W, comprising |
| ● | Homestead Lode, patent No. 283, described as Section 12, township 17S, range 21W, comprising |
| ● | Columbia Lode, patent No. 284, Described as Section 12, township 17S, range 21W, comprising |
| ● | Carlisle Lode, patent No. 279, described as Section 01, township 17S, range 21W, compromising |
See Note 7 – Subsequent Events, for additional information.
NOTE 4 – RECLAMATION
In connection with a Minimum Impact Exploration
Permit No. GR094EM issued by the New Mexico Mining and Minerals Division, the Company was required to provide an irrevocable standby letter
of credit as financial support for reclamation costs. As of both February 28, 2026 and August, 31, 2025, there were $
NOTE 5 – SHAREHOLDERS’ EQUITY
The Company’s authorized capital stock consists
of
All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one non-cumulative vote per share in all matters to be voted upon by shareholders. Shares of common stock have no pre-emptive, subscription, conversion or redemption rights and may be issued only as fully paid and non- assessable shares. Holders of common stock are entitled to equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by the Company’s Board of Directors (the “Board”) out of funds legally available. In the event of a liquidation, dissolution or winding up of the affairs of the Company, the holders of common stock are entitled to share ratably in all assets remaining available for distribution to them after payment or provision for all liabilities and any preferential liquidation rights of any preferred stock then outstanding.
10
Texas Mineral Resources Corp.
Notes to Interim Consolidated Financial Statements
February 28, 2026
(Unaudited)
In February 2025, pursuant to the closing of $
Because the warrants were previously classified within shareholders’ equity, the exercises (both on a cash and cashless basis) did not result in the recognition of any gain or loss in the Company’s consolidated statements of operations. The exercises were recorded as increases to common stock and additional paid-in capital.
On October 15, 2025, the Company issued an aggregate
of
During the quarter ended November 30, 2025, a
total of
During the quarter ended November 30, 2025, the
Company recognized stock compensation and a corresponding charge to additional paid-in capital in the amount of $
In February, 2026, the Company entered into an
option redemption-exchange agreement with a consultant whereby the consultant’s options to purchase
During the quarter ended February 28, 2026, the
Company recognized stock compensation and a corresponding charge to additional paid-in capital in the amount of $
NOTE 6 – RELATED PARTIES
In December 2024, the Company acquired an ownership
interest in the Carlisle mine and related real estate from Dan Gorski, the Company’s chief executive officer and a director, in
consideration for a promissory note in the amount of $
On January 12, 2026, Mr. Gorski (chief
executive officer and director of the Company) assigned to the Company
11
Texas Mineral Resources Corp.
Notes to Interim Consolidated Financial Statements
February 28, 2026
(Unaudited)
NOTE 7 – SUBSEQUENT EVENTS
Entry into Merger Agreement
As previously announced in an 8-K filing with the SEC on March 5, 2026, the Company entered into an Agreement and Plan of Merger dated March 4, 2026 (“Merger Agreement”) with USAR, Hamer Merger Sub, Inc., a wholly owned subsidiary of USAR (“Merger Sub 1”), and Hamer Merger Sub, LLC, a wholly owned subsidiary of USAR (“Merger Sub 2”). Pursuant to the Merger Agreement, the Company will enter into a series of mergers with Merger Sub 1 and Merger Sub 2 that will result in the business of the Company being held by a wholly owned subsidiary of USAR, and the common stock of the Company being converted into the right to receive the merger consideration described below (“Transaction”).
The Merger Agreement provides that, among other things and upon the terms and subject to the conditions found in the Merger Agreement, the following steps will occur as part of a single integrated transaction on the closing date of the Merger (“Closing”).
| (a) | Merger Sub 1 will merge with and into the Company (the “First Merger”), the separate existence of Merger Sub 1 will cease, and the Company will be the surviving corporation of the Merger and a wholly owned subsidiary of USAR (such entity from and after the Merger, the “Surviving Corporation”); | |
| (b) | the Surviving Corporation will merge with and into Merger Sub 2 (the “Second Merger”), the separate existence of the Surviving Corporation will cease, and Merger Sub 2 will be the surviving company of the Merger and a wholly owned subsidiary of USAR that holds all of the assets of the Company; | |
| (c) | all of the issued and outstanding shares of Company common stock prior to the effective time of the First Merger will be converted into the right to receive a fraction of a share of common stock of USAR determined as described below; and | |
| (d) | USAR will issue to the holders of Company common stock an aggregate of |
Under the Merger Agreement,
each share of Company common stock that is issued and outstanding immediately prior to the effective time of the First Merger shall automatically
be cancelled and cease to exist in exchange for the right to receive a fraction of a newly issued share of USAR common stock, equal to
the total number of shares of Company common stock outstanding on the Closing divided by the
Our board of directors has approved and declared advisable the Merger Agreement and the Transaction and resolved to recommend that our stockholders approve the Merger Agreement, the Transaction and related matters.
In connection with the execution of the Merger Agreement, the Company and USAR entered into a voting and support agreement (each, a “Voting and Support Agreement”) with each member of the Company’s board of directors and each of the Company’s executive officers. Pursuant to the Voting and Support Agreements, among other things, all of the Company’s directors and executive officers agreed to vote all of their shares of Company common stock in favor of the various proposals related to the Transaction and the Merger Agreement and any other matters necessary or reasonably requested by USAR for consummation of the Transaction and against any action reasonably expected to impede, delay or materially and adversely affect the Transaction.
The Merger Agreement contains customary representations,
warranties and covenants as well as conditions to Closing. One of the Closing conditions is that the Carlisle mine and related real estate
is transferred to Mr. Gorski at or prior to Closing in consideration for the cancellation and discharge of the $
Sale of USAR Common Stock
On March 10, 2026, the Company sold its
Other
Management evaluated subsequent events through April 14, 2026, the date the financial statements were available to be issued, and determined that no other material subsequent events occurred that would require adjustment to or disclosure in the accompanying consolidated financial statements.
12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
In this Quarterly Report on Form 10-Q, unless the context requires otherwise, references to “Texas Mineral Resources Corp,” “the Company” “we,” “our” or “us” refer to Texas Mineral Resources Corp. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report as well as our Annual Report on Form 10-K for the fiscal year ended August 31, 2025. This Quarterly Report on Form 10-Q may also contain statistical data and estimates we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified their data.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q, include, but are not limited to:
| ● | the closing of the Agreement and Plan of Merger dated March 4, 2026 (“Merger Agreement”) entered into by the Company and USA Rare Earth, Inc (“USAR”), Hamer Merger Sub, Inc., a wholly owned subsidiary of USAR (“Merger Sub 1”), and Hamer Merger Sub, LLC, a wholly owned subsidiary of USAR (“Merger Sub 2”); | |
| ● | the progress, potential and uncertainties of the rare-earth exploration plans at our Round Top project in Hudspeth County, Texas (the “Round Top Project,” “Project” or “Round Top”); | |
| ● | timing for a completed feasibility study, if any, for the Round Top Project; | |
| ● | the success of obtaining the necessary permits for future Round Top drill programs and project development; | |
| ● | success, if any, of Round Top Mountain Development, LLC (“RTMD”) in developing the Round Top Project, including without limitation raising sufficient capital to fund any development; | |
| ● | expectations regarding our ability to raise capital and to continue our exploration plans on our properties (either to fund our proportionate expenditures in the Round Top Project as a member of RTMD or otherwise); | |
| ● | our ability to complete a preliminary feasibility study, if at all; | |
| ● | plans regarding anticipated expenditures at the Round Top Project and our ability, if any, to fund anticipated Company expenditures; | |
| ● | plans to enter into a joint venture agreement with Santa Fe and our ability to fund such potential exploration and development project; and | |
| ● | possibility of entering into a mining venture with Steeple Rock and our ability to fund such arrangement. |
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:
| ● | risks of being classified as an “exploration stage” company for purposes of SEC Regulation S-K Item 1300; | |
| ● | risks associated with our ability to continue as a going concern in future periods; | |
| ● | risks associated with our history of losses and need for additional financing; | |
| ● | risks associated with our ability to raise capital on acceptable terms, if at all; | |
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| ● | risks associated with our operating history; | |
| ● | risks associated with owning a membership interest in Round Top which may be diluted (which could be significant) if we are unable to fund our cash call obligations and elect to dilute our ownership interest in Round Top in lieu of funding our cash calls per the amended RTMD Operating Agreement (as of February 28, 2026, our membership interest was 18.505%); | |
| ● | risks associated with our properties; | |
| ● | risks associated with the lack of history in producing metals from the Round Top Project; | |
| ● | risks associated with our need for additional financing to fund our cash call obligations with respect to Round Top, as well as the requirement in general for additional capital to further develop, the Round Top Project; | |
| ● | risks associated with owing a minority interest in Round Top; | |
| ● | risks associated with exploration activities not being commercially successful (as there is no assurance that Round Top will be commercially successful); | |
| ● | risks associated with ownership of surface rights and other title issues with respect to the Round Top Project; | |
| ● | risks associated with pursuing a potential Santa Fe joint venture arrangement and ability to finance such potential arrangement; | |
| ● | risks associated with the Steeple Rock non-binding letter of intent regarding a possible mining venture and ability to finance such possible arrangement; | |
| ● | risks associated with increased costs affecting our financial condition; | |
| ● | risks associated with a shortage of equipment and supplies adversely affecting our ability to operate properties; | |
| ● | risks associated with mining and mineral exploration being inherently dangerous; | |
| ● | risks associated with any mineralization estimates; | |
| ● | risks associated with changes in any mineralization estimates affecting the economic viability of the properties; | |
| ● | risks associated with uninsured risks; | |
| ● | risks associated with mineral operations being subject to market forces beyond our control; | |
| ● | risks associated with fluctuations in commodity prices, and in particular rare earth elements and other critical minerals that are necessary for energy transition; | |
| ● | risks associated with permitting, licenses and approval processes; | |
| ● | risks associated with governmental and environmental regulations; | |
| ● | risks associated with future legislation regarding the mining industry and climate change; | |
| ● | risks associated with potential environmental lawsuits; | |
| ● | risks associated with land reclamation requirements; | |
| ● | risks associated with rare earth and mining in general presenting potential health risks; | |
| ● | risks related to competition in the mining and rare earth elements industries; | |
| ● | risks related to macroeconomic conditions, both in the United States and internationally, including without limitation inflation, high interest rates, tariffs and other economic measures implemented by President Trump, and supply chain issues; | |
| ● | risks associated with cybersecurity threats, breaches, and disruptions associated therewith; |
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| ● | risks related to our ability to manage growth; | |
| ● | risks related to the potential difficulty of attracting and retaining qualified personnel; | |
| ● | risks related to our dependence on key personnel; | |
| ● | risks related to conducting our business in order to be excluded from the definition of an “investment company” under the Investment Company Act of 1940; | |
| ● | risks related to ongoing global hostilities, both in Ukraine and the Middle East (Iran and Israel in particular), and other possible international conflicts; | |
| ● | risks related to our United States Securities and Exchange Commission (the “SEC”) filing history; and | |
| ● | risks related to our securities. |
This list is not exhaustive of the factors that may affect the Company’s forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report, as well as in the Annual Report filed on Form 10-K for the fiscal year ended August 31, 2025. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as required by law, the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. We qualify all the forward-looking statements contained in this Quarterly Report by the foregoing cautionary statements.
In light of these risks and uncertainties, many of which are described in greater detail elsewhere in this Quarterly Report, as well as in the Annual Report filed on Form 10-K for the fiscal year ended August 31, 2025, there can be no assurance that the events predicted in forward-looking statements contained in the Quarterly Report will in fact transpire.
An investment in our common stock involves significant risks, including the risk of a loss of your entire investment. You should carefully consider the risks and uncertainties described herein before purchasing our common stock. The risks set forth herein are not the only ones facing our Company. Additional risks and uncertainties may exist and others could arise that could also adversely affect our business, financial condition, operations and prospects. If any of the risks set forth herein actually materialize, our business, financial condition, prospects and operations would suffer. In such event, the value of our common stock would decline, and you could lose all or a substantial portion of your investment.
Recent Developments
As previously announced in an 8-K filing with the SEC on March 5, 2026, the Company entered into the Merger Agreement with USAR, Merger Sub 1 and Merger Sub 2. Pursuant to the Merger Agreement, the Company will enter into a series of mergers with Merger Sub 1 and Merger Sub 2 that will result in the business of the Company being held by a wholly owned subsidiary of USAR, and the common stock of the Company being converted into the right to receive the merger consideration of an aggregate of 3,823,328 shares of USAR common stock described below (“Transaction”).
The Merger Agreement provides that, among other things and upon the terms and subject to the conditions found in the Merger Agreement, the following steps will occur as part of a single integrated transaction on the closing date of the Merger (“Closing”).
| (a) | Merger Sub 1 will merge with and into the Company (the “First Merger”), the separate existence of Merger Sub 1 will cease, and the Company will be the surviving corporation of the Merger and a wholly owned subsidiary of USAR (such entity from and after the Merger, the “Surviving Corporation”); | |
| (b) | the Surviving Corporation will merge with and into Merger Sub 2 (the “Second Merger”), the separate existence of the Surviving Corporation will cease, and Merger Sub 2 will be the surviving company of the Merger and a wholly owned subsidiary of USAR that holds all of the assets of the Company; | |
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| (c) | all of the issued and outstanding shares of Company common stock prior to the effective time of the Merger will be converted into the right to receive a fraction of a share of common stock of USAR, determined as described below; and | |
| (d) | USAR will issue to the holders of Company common stock an aggregate of 3,823,328 shares of USAR common stock, pro rata according to the number of shares of Company common stock owned. |
Under the Merger Agreement, each share of Company common stock that is issued and outstanding immediately prior to the effective time of the First Merger shall automatically be cancelled and cease to exist in exchange for the right to receive a fraction of a newly issued share of USAR common stock, equal to the total number of shares of Company common stock outstanding on the Closing divided by the 3,823,328 shares of USAR common stock being issued in the Transaction.
Our board of directors has approved and declared advisable the Merger Agreement and the Transaction and resolved to recommend that our stockholders approve the Merger Agreement, the Transaction and related matters. We expect the Transaction to be consummated after obtaining the required approval by our stockholders and the satisfaction of certain other customary closing conditions, although there can be no assurance that the Transaction will close.
In connection with the execution of the Merger Agreement, the Company and USAR entered into a voting and support agreement (each, a “Voting and Support Agreement”) with each member of the Company’s board of directors and each of the Company’s executive officers. Pursuant to the Voting and Support Agreements, among other things, all of the Company’s directors and executive officers agreed to vote all of their shares of Company common stock in favor of the various proposals related to the Transaction and the Merger Agreement and any other matters necessary or reasonably requested by USAR for consummation of the Transaction and against any action reasonably expected to impede, delay or materially and adversely affect the Transaction.
The Merger Agreement contains customary representations, warranties and covenants as well as conditions to Closing. One of the Closing conditions is that the Carlisle mine and related real estate is transferred to Mr. Gorski at or prior to Closing in consideration for the cancellation and discharge of the $75,000 promissory note owed by the Company to Mr. Gorski. Additionally, the Merger Agreement provides for termination rights and sets forth a termination fee equal to $3,250,000 owed by the Company to USAR under certain circumstances.
Our financial statements have been prepared assuming that the Company will continue as a going concern.
Our financial statements have been prepared assuming that the Company will continue as a going concern. The Company has an accumulated deficit from inception through February 28, 2026, of approximately $46,157,000 and has yet to achieve profitable operations, and projects further losses in the development of its business. At February 28, 2026, the Company had a working capital surplus of approximately $3,738,000; however the Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. The Company doesn’t expect to generate revenue from operations in the near future.
The Company does not have sufficient capital to fund its portion of the Round Top cash calls expected during the fiscal year ending August 31, 2026 or thereafter. The Company has sufficient cash to fund expected general and administrative expenses and related costs (including costs related to the Merger Agreement and Transaction) through August 31, 2026. During the six months ended February 28, 2026, we did not fund our $1,260,311 portion of the $6,748,702 total cash call by Round Top, and elected to incur dilution to our Round Top membership interest which was reduced to 18.505% at February 28, 2026. Subsequent to February 28, 2026, pursuant to the March 2026 cash call of $1,834,579 (our portion of the cash call was $339,104), we did not fund our portion, and we elected to incur dilution to our Round Top membership interest which was reduced to 18.422% at March 31, 2026. We have been informed by Round Top that the total remaining estimated budget for the 2026 calendar year is approximately $10,520,000, to be funded pro-rata by the Company and USAR. The failure of the Company to make required cash calls to Round Top during the remainder of the 2026 calendar year will result in further dilution to our current 18.422% ownership interest. We currently expect to incur continued dilution to our membership interest in Round Top rather than to fund our cash call obligations during the remainder of the 2026 calendar year. There can be no assurance that the Company will be able to raise the necessary capital to fund its cash calls (if it determines not to continue to incur dilution). We have no firm commitments for equity or debt financing and any financing that may be obtained will be on a best efforts basis. Based on these factors, there is substantial doubt as to the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of these financial statements. The failure to obtain sufficient financing may cause us to curtail, cease or discontinue operations.
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Overview of Round Top Project
We are a mining company engaged in the business of owning, acquiring, exploring and developing mineral properties. As of the filing date of this Form 10-Q, we currently own an 18.422% membership interest in Round Top, which entity holds two mineral property leases with the GLO to explore and develop a 950-acre rare earths project located in Hudspeth County, Texas, known as the Round Top Project. The leases expire in 2030 with provisions for automatic renewal if Round Top is producing in paying quantities (the receipt from the sale of materials exceeds all costs and expenses associated therewith for the prior 12 months). Round Top also holds prospecting permits covering 9,345 acres adjacent to the Round Top Project. The business strategy of Round Top is to develop a metallurgical process to concentrate or otherwise extract the metals from the Round Top Project’s rhyolite, conduct additional engineering, design, geotechnical work, and permitting necessary for a bankable feasibility study and then to extract mineral resources from the Round Top Project. There can be no assurance that Round Top will be successful in this endeavor. The Round Top Project has not established as of the date hereof that any of the properties contain any probable mineral reserves or proven mineral reserves under Item 1300 of Regulation S-K nor can there be any assurance that this will occur.
Rare earth elements are a group of chemically similar elements that usually are found together in nature – they are referred to as the “lanthanide series.” These individual elements have a variety of characteristics that are critical in a wide range of technologies, products, and applications and are critical inputs in existing and emerging applications. Without these elements, multiple high-tech technologies would not be possible. These technologies include:
| ● | cell phones; |
| ● | computer and television screens; |
| ● | battery operated vehicles; |
| ● | clean energy technologies, such as hybrid and electric vehicles and wind power turbines; |
| ● | fiber optics, lasers and hard disk drives; |
| ● | numerous defense applications, such as guidance and control systems and global positioning systems; and |
| ● | advanced water treatment technology for use in industrial, military and outdoor recreation applications. |
Because of these applications, global demand for REE is projected to steadily increase due to continuing growth in existing applications and increased innovation and development of new end uses. Interest in developing resources domestically has become a strategic necessity as there is limited production of these elements outside of China. Our ability to raise additional funds to continue to fund our participation interest in the Round Top Project may be impacted by future prices for REEs.
The Company accounts for its interest in RTMD using the proportionate consolidation method, which is an exception available to entities in the extractive industries, thereby recognizing its pro-rate share of the assets, liabilities, and operations of RTMD in the appropriate classifications in the financial statements.
USA Rare Earth Agreement
In August 2018, the Company and Morzev Pty. Ltd. (“Morzev”) entered into an agreement (the “2018 Option Agreement”) whereby Morzev was granted the exclusive right to earn and acquire a 70% interest in the Round Top Project by financing $10 million of expenditures in connection with the Project, increasable to an 80% interest for an additional $3 million payment to the Company. In August 2019, the Company and USAR entered into an amended and restated option agreement as further amended in June 2020 (the “2019 Option Agreement” and collectively with the 2018 Option Agreement, the “Option Agreement”), whereby the Company restated its agreement to grant USAR the exclusive right to earn and acquire a 70% interest, increasable to an 80% interest, in Round Top.
In May 2021, and in accordance with the terms of the Option Agreement, the Company and USAR entered into a contribution agreement (“Contribution Agreement”) whereby each of the Company and USAR contributed assets to Round Top Mountain Development, LLC (“RTMD”), a wholly-owned subsidiary of the Company, in exchange for their initial ownership interests in RTMD, of which the Company initially owned a membership interest equating to 20% of Round Top and USAR initially owned a membership interest equating to 80% of Round Top. Concurrently therewith, the Company and USAR, as the two members, entered into a limited liability company agreement (“Operating Agreement”) governing the operations of RTMD which contains customary and industry standard terms as contemplated by the Option Agreement. USAR is the manager of RTMD.
Upon entry into the Contribution Agreement, the Company assigned the following contracts and assets to RTMD in exchange for its 20% membership interest in RTMD:
| ● | the assignment and assumption agreement with respect to the mineral leases from the Company to RTMD; | |
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| ● | the assignment and assumption agreement with respect to the surface lease from the Company to RTMD; | |
| ● | the assignment and assumption agreement with respect to the surface purchase option from the Company to RTMD; | |
| ● | the assignment and assumption agreement with respect to the water lease from the Company to RTMD; and | |
| ● | the bill of sale and assignment agreement of existing data with respect to RTMD owned by the Company. |
and USAR assigned the following assets to RTMD (or the Company, as applicable) for its 80% membership interest in RTMD:
| ● | cash to RTMD to continue to fund Round Top Project operations in the amount of approximately $3,761,750 comprising the balance of the $10 million required expenditure to earn a 70% interest in RTMD; | |
| ● | cash in the amount of $3 million to the Company upon exercise of the USAR option to acquire from the Company an additional 10% interest in RTMD, resulting in the aggregate ownership interest of 80% in RTMD; | |
| ● | bill of sale and assignment agreement of the Pilot Plant to RTMD; | |
| ● | the assignment and assumption regarding relevant contracts and permits with respect to RTMD; and | |
| ● | bill of sale and assignment agreement of existing data and intellectual property owned by USAR to RTMD. |
In June 2023, the Company, USAR and the manager amended and restated the Operating Agreement and the following material amendments to the Operating Agreement were adopted:
Cash Calls
On the basis of the adopted program and budget then in effect, the manager will submit to each member monthly cash calls at least 10 days before the last day of each month, and within 10 days of receipt, (a) USAR will pay to RTMD, as an additional capital contribution, its proportionate share of the estimated cash requirements based on its interest and (b) the Company will either (i) pay to RTMD, as an additional capital contribution, its proportionate share of the estimated cash requirements based on its interest, or (ii) deliver to RTMD a written notice indicating what amount, if any, of the applicable estimated cash requirements that the Company will contribute (the “Notice of Non-Contribution”). Failure by the Company to deliver payment of its proportionate share of the estimated cash requirements, as an additional capital contribution, or to deliver a Notice of Non-Contribution within the 10 day period shall automatically be considered a “Deemed Non-Contribution” and shall have the same effect as if the Company provided a timely Notice of Non-Contribution with respect to non-contribution of its entire proportionate share of the applicable cash call.
Remedies for Failure to Meet Cash Calls
Non-Contribution. Capital contributions only will be made to fund programs and budgets. If the Company does not contribute all or any portion of any additional capital contribution that it is required to contribute pursuant to a Notice of Non-Contribution or a Deemed Non-Contribution (such unfunded amount shall be deemed the “Shortfall Amount”), then USAR shall fund the entire Shortfall Amount within 5 business days after the Notice of Non-Contribution or Deemed Non-Contribution.
Dilution. Upon the contribution of the Shortfall Amount by USAR, the interests of the members will be recalculated based on the adjustment provision set forth below in the sub-heading “– Adjustment of Interests”.
Maximum Dilution. The dilution of the Company shall not fall below a 3% interest in RTMD (the “Minimum Percentage Interest”). Upon the contribution by USAR of a Shortfall Amount which otherwise would result in a dilution of the Company’s interest below the Minimum Percentage Interest, USAR will receive a priority distribution of available cash, in addition to a distribution of available cash to which USAR otherwise is entitled to receive as a result of its proportionate additional capital contribution pursuant to the applicable cash call request, up to the Shortfall Amount that would have resulted in the Company’s interest being further diluted but for the Minimum Percentage Interest (the “Priority Distribution”). The Priority Distribution will continue until USAR has been reimbursed for its contribution of the Shortfall Amount that would have resulted in the Company having an interest below the Minimum Percentage Interest, after which time the members shall receive distributions of available cash pro rata in proportion to their respective interests.
Adjustment of Interests. If USAR contributes the Shortfall Amount, then the then current interest of the Company will be reduced (subject to the Minimum Percentage Interest), effective as of each cash call under an additional capital contribution for the applicable program and budget, by a fraction, expressed as a percentage:
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| ● | the numerator of which equals the Shortfall Amount actually funded by USAR; and | |
| ● | the denominator of which equals the market capitalization of the Company. |
Distributions
Cash in excess of authorized reserves will be distributed to the members pro-rata in proportion to their respective interests on a periodic basis as determined by the management committee. RTMD will be required to make tax distributions to each member. Once USAR has been paid the Priority Distribution, if applicable, all distributions made in connection with the sale or exchange of all or substantially all of RTMD’s assets and all distributions made in connection with the liquidation of RTMD will be made to the members pro-rata in accordance with their respective interests.
Other material terms of the Operating Agreement that remain unchanged as a result of the June 2023 amendment to the Operating Agreement are as follows:
Management.
A management committee will make the major decisions of RTMD, such as approval of the respective program and budget, and the manager will implement such decisions. The management committee consists of three representatives of the members, with two being appointed by USAR and one by the Company (currently Dan Gorski). The representatives vote the ownership percentage interests of their appointing member.
Management Committee Meetings.
Meetings will be held every three months unless otherwise agreed. For matters before the management committee that require a vote, voting is by simple majority except for certain “major decisions” that require a unanimous vote. So long as the Company maintains a 15% or greater ownership interest, the nine decisions identified in the bullet points below require unanimous approval. If the Company’s ownership interest falls below 15%, the number of unanimous decisions is reduced to five (being the first five bullet points below). If the Company is acquired by a REE mining company or sells its ownership interest to a REE mining company, in each case who elects a majority of the Company’s board, this unanimous approval requirement can be suspended by USAR, at its option. The major decisions requiring unanimous approval, as set forth above, are:
| ● | approval of an amendment to any program and budget that causes the program and budget to increase by 15% or more, except for emergencies; | |
| ● | other than purchase money security interests or other security interests in RTMD equipment to finance the acquisition or lease of RTMD equipment used in operations, the consummation of a project financing or the incurrence by RTMD of any indebtedness for borrowed money that requires the guarantee by any member of any obligations of RTMD; | |
| ● | substitution of a member under certain circumstances and dissolution of RTMD; | |
| ● | the issuance of an ownership interest or other equity interest in RTMD, or the admission of any person as a new member of RTMD, other than in connection with the exercise of a right of first offer by a member; | |
| ● | the redemption of all or any portion of an ownership interest, except for limited circumstances provided for in the Operating Agreement; | |
| ● | a decision to grant authorization for RTMD to file a petition for relief under any chapter of the United States Bankruptcy Code, to consent to such relief in any involuntary petition filed against RTMD by any third party, or to admit in writing any insolvency of RTMD or inability to pay its debts as they become due, or to consent to any receivership of RTMD; | |
| ● | acquisition or disposition of significant mineral rights, other real property or water rights outside of the area of interest as set forth in the Operating Agreement or outside of the ordinary course of business; | |
| ● | the merger of RTMD into or with any other entity; and | |
| ● | the sale of all or substantially all of RTMD’s assets. |
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Manager.
The manager will manage, direct and control operations in accordance with program and budget, will prepare and present to the management committee a proposed program and budget, and will generally oversee and implement all of the day to day activities of RTMD. The manager will conduct necessary equipment and materials procurement and property and equipment maintenance activities, with all operations to be conducted in accordance with adopted program and budget.
Permitted Transfers.
Certain transfers are permitted under the Operating Agreement, including transfers to affiliates or through certain mergers or other forms of business reorganization. A member may also encumber its ownership interest provided that if the ownership interest is foreclosed upon, the other member has a pre-emptive right to acquire such ownership interest at the foreclosure sale. If the transfer is a “permitted transfer,” the transferee is automatically admitted as a member; otherwise unless the other member agrees, the transferee is only an economic interest holder with no voting or other rights held by a member.
Right of First Offer.
If a member desires to transfer all or a portion of its ownership interest to a third party (other than a permitted transfer), it may do that without the consent of the other member so long as it gives the other member the first right to purchase its ownership interest on the same terms. If the other member does not elect to purchase the ownership interest on such terms, the member may sell its ownership interest on such terms and the transfer will be a permitted transfer.
Drag-Along Right.
If USAR accepts a bona fide offer to purchase its entire ownership interest and all other rights under the Operating Agreement from an unrelated third party, the Company will then be obligated to sell its entire ownership interest and all other rights under the Operating Agreement to the unrelated third party on the same terms and conditions as are accepted by USAR.
Operations of the Round Top Project.
During the fiscal year ending August 31, 2025, the total cash calls by Round Top, and expenditures in Round Top, was $3,304,829 used primarily to optimize the leaching and developing of the CIX/CIC processing of the Round Top Project. During the six months ended February 28, 2026, there were cash calls by Round Top of $6,748,702 and in March 2026, there was a cash call by Round Top of $1,834,579. We have been informed by Round Top that the total remaining estimated budget for the 2026 calendar year is approximately $10,520,000, to be funded pro-rata by the Company and USAR. Initial process design work will be carried out at USAR’s facility in Wheat Ridge, Colorado. Pending completion of the initial process development, this facility will either be relocated to or replicated at USAR’s Oklahoma facility where a pilot plant is expected to be established. It is estimated that the Round Top Project will require additional time and further expenditure to complete a bankable feasibility study. The Company lacks sufficient capital to fund any cash calls during the current fiscal year or thereafter and we expect to incur dilution to our then current membership interest in lieu of funding our Round Top cash calls during 2026.
Other Potential Mining Opportunities
Santa Fe Gold Corporation/Alhambra Project
In November 2021, the Company entered into a mineral exploration and option agreement with Santa Fe Gold Corporation (“Santa Fe”), which agreement was amended in May 2024. Under the option agreement, the Company has the right to pursue a joint venture arrangement with Santa Fe to jointly explore and develop one or more target silver properties to be selected by the Company among patented and unpatented mining claims held by Santa Fe within the project area located in the Black Hawk Mining District in Grant County, New Mexico. Completion of a joint venture agreement, if any, is subject to the successful outcome of a multi-phase exploration plan leading to a bankable feasibility study planned to be undertaken in the near future by the Company. Under the contemplated terms of the proposed joint venture agreement, the Company would be project operator and initially own 50.5% of the joint venture while Santa Fe would initially own 49.5%. Additional terms of the joint venture are to be negotiated between the Company and Santa Fe in the future. There can be no assurance that the Company and Santa Fe will enter into a formal joint venture agreement, that there will be a successful outcome to any multi-phase exploration plan, that we will have the financial resources to fund exploration activities in the future, that any bankable feasibility study will be completed, or that this project will be commercialized.
Under the terms of the option agreement, the Company plans to conduct a district-wide evaluation among the patented and unpatented claims held by Santa Fe, as well as the area of interest, consisting of geologic mapping, sampling, trenching, radiometric surveying, geophysics, drilling and/or other methods as warranted. Based on the district-wide evaluation, the Company would designate a “project area or areas,” the size or sizes of which will be decided at the time, and commence development work. The property covered in the option agreement is approximately 1,600 acres and covers approximately 75% of the Black Hawk Mining District. The area to be studied also includes a two-mile radius “area of interest.” The term of the option is for so long as the Company continues to conduct exploration activities in the Project Area (although there can be no assurance that the Company will continue to conduct exploration activities in any future period, due to lack of financial resources or otherwise) and can be exercised on 60 days’ notice to Santa Fe. During the term of the option and subject to limited exceptions, Santa Fe has agreed not to transfer any portion of its patented and unpatented mining claims within the Black Hawk Mining District without granting the Company the right of first refusal.
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Discussions with Steeple Rock
The Company is in discussions with Steeple Rock Holding Company, LLC (“Steeple Rock”) to explore the possibility of entering into a mining venture involving (i) four mines, being the Billali mine, the Jim Crow mine, the inactive Imperial mine, and the Carlisle mine, all located on patented mining claims in Grant County, New Mexico, and (ii) certain related assets including a 150 tons per day, unassembled flotation mill located in Duncan, Arizona. The Billali mine, Jim Crow mine and millsite have valid operating permits; the Imperial mine and the Carlisle mine do not.
The initial anticipated capital required for the potential project, in an amount to be determined and agreed upon by the parties, is expected to be used for the initiation of mining and milling operations. There can be no assurance that our preliminary discussions will result in a definitive agreement or, if a definitive agreement is reached, the potential project will proceed on the preliminary and general terms described above or at all. Legal, regulatory, business and financial diligence, along with the procurement of necessary capital to proceed with this potential project in an amount to be determined (of which there can be no assurance the necessary capital can be procured to proceed with this potential project), will need to be satisfactorily completed by the parties, as well as other customary conditions and approvals.
It has been discussed that we may acquire up to a 50.1% interest in this potential project by contribution of the Carlisle mine and by raising the initial capital needed, in an amount to be determined, to assemble the mill and commence development and production.
Carlisle Mine
In December 2024, Dan Gorski, our chief executive officer and a director, assigned all of his ownership interest in the Carlisle mine and related real estate to a wholly-owned subsidiary of the Company in consideration for a $75,000 promissory note, without interest, due and payable by the Company upon demand, secured by the property conveyed. Mr. Gorski acquired the property in 2022 for $75,000. The Carlisle mine and related real estate consist of the following:
| ● | Carlisle Millsite, patent No. 280, described as Section 12, township 17S, range 21W, comprising 5.00 acres, more or less; |
| ● | Homestead Lode, patent No. 283, described as Section 12, township 17S, range 21W, comprising 17.91 acres, more or less; |
| ● | Columbia Lode, patent No. 284, Described as Section 12, township 17S, range 21W, comprising 19.46 acres, more or less; and |
| ● | Carlisle Lode, patent No. 279, described as Section 01, township 17S, range 21W, compromising 20.660 acres, more or less. |
If and upon the Closing of the Merger Agreement, the Carlisle mine and related real estate will be conveyed to Mr. Gorski in consideration of the cancellation and discharge of the $75,000 promissory note owed by the Company to Mr. Gorski.
Liquidity and Capital Resources
Recent Convertible Debt Financing
In February 2025, pursuant to the closing of the $1,098,000 of debt financing, the Company issued unsecured promissory notes in the principal amount of $1,098,000 and, as additional consideration for effecting the loans, the Company issued warrants to purchase an aggregate of up to 10,980,000 shares of common stock.
On August 9, 2025, the notes in an aggregate principal amount of $1,098,000 were converted by the holders into an aggregate of 3,660,000 shares of common stock pursuant to the terms of the fixed conversion rate in the notes. As a result of the conversion of the notes in the aggregate principal amount of $1,098,000 into an aggregate of 3,660,000 shares of common stock, these notes were extinguished in full.
During the six months ended February 28, 2026, (i) holders exercised warrants to purchase 2,100,000 shares of the Company’s common stock at an exercise price of $0.30 per share (resulting in the Company receiving aggregate cash consideration of $630,000) and (ii) holders of warrants to purchase 8,880,000 shares of common stock exercised these warrants on a cashless, net issuance exercise basis and were issued 6,187,472 shares of common stock. No warrants issued in connection with the February 2025 transaction remain outstanding.
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Transfer of USAR Common Stock by Mr. Gorski to the Company and Subsequent Sale by the Company of the USAR Common Stock
On January 12, 2026, Mr. Gorski (chief executive officer and director of the Company) assigned to the Company 157,686 shares of USAR common stock that were previously issued by USAR to Mr. Gorski, originally as an award of incentive units granted by USAR to Mr. Gorski in May 2020 and subsequently such award of incentive units automatically converted into USAR common stock in connection with the closing of the USAR business combination in March 2025 (“Business Combination”), for his personal services rendered with respect to advancing the Round Top project. These shares of USAR common stock, when issued to Mr. Gorski as an award of incentive units in May 2020, had nominal value. As the result of USAR completing its Business Combination, its shares of common stock commenced trading on The Nasdaq Stock Market LLC and, as such, the market value of the USAR shares transferred to the Company by Mr. Gorski, based on the closing price on the date the shares were actually received by the Company, was approximately $3,480,000 and was recorded as additional paid-in capital. At February 28, 2026, the shares were marked to market and had a value of approximately $2,980,000 with an unrealized loss of approximately $500,000 recognized as an other (expense) in the consolidated statements of operations. On March 10, 2026, the Company sold these 157,686 shares of USAR common stock for total net proceeds of $2,999,000.
Liquidity
At February 28, 2026, our accumulated deficit was approximately $46,157,000 and our cash position was approximately $790,000. We had a working capital surplus of approximately $3,738,000. Round Top has not commenced commercial production on the Round Top Project. We have no revenues from operations and anticipate we will have no operating revenues until production from the Round Top Project, if any, of which there can be no assurance. This property is in the exploration stage.
During the six months ending February 28, 2026, we did not fund our cash call obligations pursuant to the Operating Agreement. In lieu of funding our $1,260,311 portion of the $6,748,702 total cash call by Round Top during the six months ended February 28, 2026, we incurred dilution in our membership interest, reducing our membership interest from 18.779% at August 31, 2025 to 18.505% at February 28, 2026. In March 2026, in lieu of funding our $339,104 portion of the April 2026 $1,834,579 total cash call by Round Top, we incurred dilution in our membership interest, reducing our membership interest from 18.505% to 18.422% at March 31, 2026. We have been informed by Round Top that the total remaining estimated budget for the 2026 calendar year is approximately $10,520,000, to be funded pro-rata by the Company and USAR. The Company likely will decide to incur dilution to its then current membership interest in lieu of funding in cash its Round Top budget obligations during the 2026 calendar year, as it currently does not have sufficient capital to fund any cash calls; consequently our ownership interest in the Round Top Project will likely be further diluted during the 2026 calendar year. We will be required to raise additional capital to fund future cash calls from Round Top (unless we elect in lieu of making cash contributions to continue diluting our membership interest percentage, which dilution could be significant, and there can be no assurance that we will be able to raise the necessary capital to fund future Round Top cash calls. We estimate that our current cash position is only sufficient to fund estimated general and administrative expenses (including costs related to the Merger Agreement and Transaction) through August 2026.
While we do not have sufficient cash on hand to fund any portion of the Round Top budget during our current fiscal year and through the end of the 2026 calendar year, we do estimate that we have sufficient capital to fund our estimated general and administrative expenses (including costs related to the Merger Agreement and Transaction) through August 31, 2026. Therefore, we will need to raise additional capital to fund our portion of the Round Top budget if we elect not to dilute our Round Top membership interest. If we elect to dilute our Round Top membership interest (through choice or as a result of the failure to raise capital), such event will result in the dilution to our Round Top membership interest. If we are not able to raise capital to fund our estimated general and administrative expenses past our current fiscal year, we will likely need to curtail operations. The most likely source of future financing presently available to us is through the sale of our securities. Any sale of our shares of common stock will result in dilution of equity ownership to existing stockholders. This means that if we sell shares of common stock, more shares will be outstanding and each existing stockholder will own a smaller percentage of the shares then outstanding. Moreover, the actual or perceived sale of additional shares of our common stock to raise capital could depress the price of our common stock which could adversely impact our ability to raise capital, result in more dilution to be incurred by existing stockholders, and also negatively impact the dilution calculation with respect to our Round Top membership interest. Alternatively, we may rely on debt financing and assume debt obligations that require us to make substantial interest and capital payments. Also, we may issue or grant warrants or options in the future pursuant to which additional shares of common stock may be issued. Exercise of such warrants or options will result in dilution of equity ownership to our existing stockholders. We have no firm commitment with respect to obtaining debt or equity financing and, accordingly, we will be reliant upon a best efforts financing strategy. Accordingly, there is no assurance that we will be able to raise necessary capital, if any, to (i) fund our portion of the Round Top budget during the fiscal year ending August 31, 2026 and through the end of the 2026 calendar year (in the event we decide not to incur dilution to our membership interest) and (ii) fund general and administrative expenses past our current fiscal year, the failure of which would likely cause us to curtail, discontinue or cease our operations.
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Results of Operations
Six months ended February 28, 2026 and February 28, 2025
General and Revenue
We had no operating revenues during the six months ended February 28, 2026 and February 29, 2025. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $46,157,000 as of February 28, 2026.
Operating expenses, other income (expenses) and resulting losses from Operations.
We incurred exploration costs for the six months ended February 28, 2026 and February 28, 2025, in the amount of approximately $20,000 and $26,000, respectively. The expenditures for the six months ended February 28, 2026 and February 28, 2025 were primarily for exploration costs for the Black Hawk project in New Mexico. During the six months ended February 28, 2026 and February 28, 2025, any exploration expenditures for mining activities at Round Top were funded by RTMD. We account for our interest in RTMD under the proportional consolidation method. Under the proportional consolidation method, we record our share of expenses of RTMD within the income statement in the same line items that we would if we were to consolidate our financial statements with RTMD.
Our general and administrative expenses for the six months ended February 28, 2026 and February 28, 2025, respectively, were approximately $543,000 and $411,000. For the six months ended February 28, 2026 and February 28, 2025, this amount included approximately $168,000 and $104,000, respectively, in stock-based compensation to directors and Common Stock. The remaining expenditures were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.
For the six months ended February 28, 2026 and February 28, 2025, we earned approximately $15,000 and $6,000, respectively, in interest income from depository accounts. Other expense for the six months ended February 28, 2026 includes approximately $500,000 as a change in value of our USAR common stock.
For the six months ended February 28, 2025, we recognized approximately $39,000 in interest expense related to accretion of debt discount recognized on our convertible notes.
We had losses from operations for the six months ended February 28, 2026 and February 28, 2025 totaling approximately $562,000 and $437,000, respectively.
We had net losses for the six months ended February 28, 2026 and February 28, 2025 totaling approximately $1,047,000 and $471,000, respectively.
Three months ended February 28, 2026 and 2025
General and Revenue
We had no operating revenues during the three months ended February 28, 2026 and February 28, 2025. We are not currently profitable. As a result of ongoing operating losses, we had an accumulated deficit of approximately $46,157,000 as of February 28, 2026.
Operating expenses, other income (expenses) and resulting losses from Operations.
We incurred exploration costs for the three months ended February 28, 2026 and February 28, 2025 in the amount of approximately $15,000 and $4,000, respectively. The expenditures for the three months ended February 28, 2026 and February 28, 2025 were primarily for exploration costs for the Black Hawk project in New Mexico. During the three months ended February 28, 2026 and February 28, 2025, any exploration expenditures for mining activities at Round Top were funded by RTMD. We account for our interest in RTMD under the proportional consolidation method. Under the proportional consolidation method, we record our share of expenses of RTMD within the income statement in the same line items that we would if we were to consolidate our financial statements with RTMD.
Our general and administrative expenses for the three months ended February 28, 2026 and February 28, 2025 were approximately $296,000 and $200,000, respectively. For the three months ended February 28, 2026 and February 28, 2025, this amount included approximately $81,000 and $51,000, respectively, in stock-based compensation to directors. The remaining expenditures were primarily for payroll and related taxes and benefits, professional fees and other general and administrative expenses necessary for our operations.
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For the three months ended February 28, 2026 and February 28, 2025, we earned approximately $9,000 and $2,000, respectively, in interest income from depository accounts. Other expense for the three months ended February 28, 2026 includes approximately $500,000 as a change in value of our USAR common stock.
For the three months ended February 28, 2025, we recognized approximately $39,000 in interest expense related to accretion of debt discount recognized on our convertible notes.
We had losses from operations for the three months ended February 28, 2026 and February 28, 2025 totaling approximately $311,000 and $204,000, respectively.
We had net losses for the three months ended February 28, 2026 and February 28, 2025 totaling approximately $801,000 and $242,000, respectively.
Investment Company Act Exclusion
Section 3(c)(9) of the Investment Company Act of 1940, as amended (“1940 Act”), provides that a company “substantially all of whose business consists of owning or holding oil, gas, or other mineral royalties or leases, or fractional interests therein, or certificates of interest or participation in or investment contracts relative to such royalties, leases, or fractional interests” is not an investment company within the meaning of the 1940 Act. The Company has determined that this exemption applies to it giving consideration to the following four factors:
| ● | whether the exempted activity constitutes “substantially all” of our business; | ||
| ○ | The Company has owned mineral leases (or a certificate of interest or participation in or investment contract relative to the mineral leases) since 2010, substantially all of our business from 2010 until May 2021 consisted of owning and developing the mineral leases and, after the May 2021 “farm-down” of our 100% interest in the mineral leases, substantially all of our business consists of owning and holding a certificate of interest or participation in or investment contract relative to the mineral leases now owned by RTMD (of which we are a member). The Company’s mineral assets historically, as well as the value of the certificate of interest at February 28, 2026, have been booked at cost in accordance with GAAP. We have an accumulated deficit of approximately $46,157,000 at February 28, 2026 as a result of owning and developing the Round Top Project. | ||
| ● | whether we own or trade in the mineral leases; | ||
| ○ | The Company has owned the mineral leases, which are now owned by RTMD, since 2010 and neither the Company nor RTMD is in the business of dealing or trading in the mineral leases. | ||
| ● | what qualifies as an eligible asset for purposes of the exception; and | ||
| ○ | The statute specifically references mineral leases and our mineral leases were owned by the Company and are now owned by RTMD. In accordance with Regulation S-K Item 1300 that governs disclosure by registrants engaged in mining operations, the definition of mineral resource is “a concentration or occurrence of material of economic interest in or on the Earth’s crust.” Our rare earth elements and minerals underlying the mineral leases meet that definition, as well as does coal, silver, gold and other material mined for economic value by registrants involved in mining operations. The SEC staff has recognized that an excepted entity can also engage in related business activities such as exploring, developing, and operating the eligible assets. | ||
| ● | what qualifies as a “certificate of interest or participation in” or an “investment contract relative to” the eligible assets. | ||
| ○ | The statute allows a Company to own a “certificate of interest” or “participation in” the mineral leases. The SEC staff has recognized that limited partnership interests and/or similar securities issued by entities that themselves own the leases constitute “certificate of interest or participation in or investment contracts” related to such leases. The Company’s 18.505% membership interest in RTMD as of February 28, 2026 constitutes a “certificate of interest or participation in” or “an investment contract relative to” the mineral leases that are owned by RTMD. | ||
The Company intends to continue to conduct its business operations in order to continue to be excluded from the definition of an “investment company” under the 1940 Act.
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Off-Balance Sheet Arrangements
None.
Critical Accounting Estimates
Management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. Preparation of financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and the related disclosures of contingencies. Management bases its estimates on various assumptions and historical experience, which are believed to be reasonable; however, due to the inherent nature of estimates, actual results may differ significantly due to changed conditions or assumptions. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are fairly presented in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
At the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act). Based on that evaluation, and in light of the material weakness existing in our internal controls over financial reporting as of August 31, 2025 (as described in greater detail in our annual report on From 10-K for the year ended August 31, 2025), the CEO and CFO have concluded that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were not effective in providing reasonable assurance that: (i) information required to be disclosed by us in our reports that we file or submit to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
As of the date of this Quarterly Report, other than as set forth below, there have been no material changes to the risk factors disclosed in Part I, Item 1A, of the Annual Report on Form 10-K filed with the SEC on November 28, 2025. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. This Quarterly Report should be read in conjunction with the risk factors disclosed in our Annual Report and other reports we file with, or furnish to, the SEC. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Because the market price of USAR common stock will fluctuate, the Company’s stockholders cannot be sure of the trading price of the merger consideration they will receive as result of the Transaction.
In the Transaction, each share of Company common stock that is issued and outstanding immediately prior to the effective time of the First Merger shall automatically be cancelled and cease to exist in exchange for the right to receive a fraction of a newly issued share of USAR common stock equal to the total number of shares of Company common stock outstanding on the Closing, divided by the 3,823,328 shares of USAR common stock being issued in the Transaction. This exchange ratio is fixed and will not be adjusted for changes in the market price of either USAR common stock or the Company common stock. Changes in the price of USAR common stock between now and the time of the Transaction will affect the value that our stockholders will receive in the Transaction. Neither we nor USAR is permitted to terminate the Merger Agreement as a result of any increase or decrease in the market price of USAR common stock or Company common stock.
Stock price changes may result from a variety of factors, including general market and economic conditions, changes in USAR’s businesses, operations and prospects, and regulatory considerations, many of which are beyond our and USAR’s control. Therefore, at the time of the special meeting, our stockholders will not know the market value of the consideration that our stockholders will receive at the effective time. You should obtain current market quotations for USAR common stock and for Company common stock.
The Transaction is subject to conditions, some or all of which may not be satisfied, or completed on a timely basis, if at all. Failure to complete the Transaction in a timely manner or at all could have adverse effects on us.
The completion of the Transaction is subject to a number of conditions, including, among others, (i) the authorization for listing on Nasdaq of the shares of USAR common stock to be issued in connection with the Transaction, (ii) the absence of any order or law prohibiting consummation of the Transaction, (iii) the approval of the Transaction by our stockholders, (iv) with respect to each party’s obligation to consummate the Transaction, the performance by the other party of its respective obligations under the Merger Agreement in all material respects, and the accuracy of such other party’s representations and warranties in the Merger Agreement (subject to certain materiality qualifiers) and (v) no “material adverse effect” having occurred in respect of either party.
Under the Merger Agreement, either we or USAR may terminate the Merger Agreement if the Transaction has not been completed by December 4, 2026 or by any later date to which the parties may mutually agree. However, this right to terminate the Merger Agreement will not be available to any party that has breached its obligations under the Merger Agreement and who’s action or failure to act has primarily caused or resulted in the failure of the Transaction to be consummated on or before that date.
There can be no assurance that the conditions to the completion of the Transaction will be satisfied or waived or that the Transaction will be completed. The failure to satisfy all of the required conditions could delay the completion of the Transaction for a significant period of time or prevent it from occurring at all. If the Transaction is not completed, or if there are significant delays in completing the Transaction, the trading price of our common stock and our future business and financial results could be negatively affected, and we may be subject to several risks, including the following::
| ● | we may experience negative reactions from the financial markets, including negative impacts on the market price of Company common stock; |
| ● | the manner in which industry contacts, business partners and other parties perceive us may be negatively impacted, which in turn could affect our operations or our ability to compete for new business or obtain renewals in the marketplace more broadly; |
| ● | we may be required, under certain circumstances, to pay USAR a termination fee of $3,250,000 under the Merger Agreement; |
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| ● | we will be required to pay certain costs relating to the Transaction, whether or not the Transaction is completed, such as legal, accounting, financial advisor and printing fees; |
| ● | under the Merger Agreement, we are subject to certain restrictions on the conduct of business prior to completion of the Transaction, which may adversely affect our ability to execute certain of its business strategies; and |
| ● | matters relating to the Transaction may require substantial commitments of time and resources by our management, which could otherwise have been devoted to other opportunities that may have been beneficial to us as an independent company. |
We also could be subject to litigation related to any failure to complete the Transaction or to enforcement proceedings commenced against us to perform obligations under the Merger Agreement. If the Transaction is not completed, we cannot assure our stockholders that the risks described above will not materialize and will not materially affect the business and financial results of the Company.
We may become subject to lawsuits relating to the Transaction, which could adversely affect our business, financial condition and operating results.
We and/or our respective directors and officers may become subject to lawsuits relating to the Transaction. Such litigation is very common in connection with acquisitions of public companies, regardless of the merits of the underlying acquisition. While we will evaluate and defend against any actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation could have an adverse effect on our business, financial condition and operating results.
The Merger Agreement restricts us from pursuing alternatives to the Transaction.
The Merger Agreement contains provisions that restrict us from soliciting or entering into discussions with any third party regarding any competing proposal or offer for a competing transaction. This could prevent us from pursuing an alternative transaction that you may prefer or that may be more lucrative to our stockholders.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Except as set forth below, all unregistered sales of equity securities during the period covered by this Quarterly Report (including through the date hereof) were previously disclosed in our current reports on Form 8-K. For clarity, each of the October 2025 and November 2025 issuances described below was the result of a warrant exercise and the potential issuance of such shares of common stock underlying the warrant was previously disclosed in Item 3.02 of a Form 8-K filed in February 2025.
| Date | Description | Number of Shares | Purchaser | Proceeds ($) |
Consideration | Exemption (C) |
| October 2025 | Common Stock | 100,000 | Warrant Holder | $30,000 | Cash | Sec. 4(a)(2) |
| November 2025 | Common Stock | 500,000 | Warrant Holder | $150,000 | Cash | Sec. 4(a)(2) |
| January 2026 | Common Stock | 111,729 | Directors | $Nil | Services | Sec. 4(a)(2) |
| February 2026 | Common Stock | 45,250 | Consultant | $Nil | Services | Sec. 4(a)(2) |
| March 2026 | Common Stock | 123,581 | Directors | $Nil | Services | Sec. 4(a)(2) |
With respect to sales designated by “Sec. 4(a)(2),” these shares were issued pursuant to the exemption from registration contained in to Section 4(a)(2) of the Securities Act as privately negotiated, isolated, non-recurring transactions not involving any public offer or solicitation. The purchaser represented that its intention was to acquire the shares for investment only and not with a view toward distribution. None of the securities were sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved.
We did not repurchase any of our securities during the quarter covered by this report.
Item 3. Defaults upon Senior Securities
None.
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Item 4. Mine Safety Disclosures
Pursuant to Section 1503(a) of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (The “Dodd-Frank Act”), issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions, and mining-related fatalities. During the quarter ended February 28, 2026, our U.S. exploration properties were not subject to regulation by the Federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977.
Item 5. Other Information
None
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Item 6. Exhibits
The following exhibits are attached hereto or are incorporated by reference:
| Exhibit | ||
| No. | Description |
| 2.1 | Plan of Conversion, dated August 24, 2012, incorporated by reference to Exhibit 2.1 of our Form 8-K filed with the SEC on August 29, 2012. | |
| 2.2 | Agreement and Plan of Merger, incorporated by reference to Exhibit 2.1 of the Company’s current report on Form 8-K filed with the SEC on March 5, 2026. | |
| 3.1 | Delaware Certificate of Conversion, incorporated by reference to Exhibit 3.1 of our Form 8-K filed with the SEC on August 29, 2012. | |
| 3.2 | Delaware Certificate of Incorporation, incorporated by reference to Exhibit 3.2 of our Form 8-K filed with the SEC on August 29, 2012. | |
| 3.3 | Delaware Certificate of Amendment, incorporated by reference to Exhibit 3.1 of our Form 8-K filed with the SEC on March 18, 2016 | |
| 3.4 | Delaware Bylaws, incorporated by reference to Exhibit 3.3 of our Form 8-K filed with the SEC on August 29, 2012. | |
| 4.1 | Form of Common Stock Certificate, incorporated by reference to Exhibit 4.1 of our Form 10-K for the period ended August 31, 2009 filed with the SEC on February 8, 2011. | |
| 10.1 | Amended and Restated 2008 Stock Option Plan, incorporated by reference to Exhibit 10.1 of our Form 10-Q for the period ended May 31, 2011 filed with the SEC on July 15, 2011. | |
| 10.2 | Mining Lease, incorporated by reference to Exhibit 10.2 of our Form 10-K for the period ended August 31, 2009 filed with the SEC on February 8, 2011. | |
| 10.3 | Mining Lease dated November 2011 with the State of Texas, incorporated by reference to Exhibit 10.3 of of the Company’s Annual Report on Form 10-K for the period ended August 31, 2019 filed with the SEC on November 27, 2019. | |
| 10.4 | Purchase option agreement dated September 2014 with the State of Texas, incorporated by reference to Exhibit 10.4 of of the Company’s Annual Report on Form 10-K for the period ended August 31, 2019 filed with the SEC on November 27, 2019. | |
| 10.5 | Groundwater lease dated September 2014 with the State of Texas, incorporated by reference to Exhibit 10.5 of of the Company’s Annual Report on Form 10-K for the period ended August 31, 2019 filed with the SEC on November 27, 2019. | |
| 10.6 | ReeTech Operating Agreement, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the Commission on July 21, 2015. | |
| 10.7 | Amendment Number One to the Reetech Operating Agreement, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K as filed with the Commission on November 30, 2015. | |
| 10.8 | Amendment Number One to the TRER License, incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K as filed with the Commission on November 30, 2015. | |
| 10.9* | Director’s Agreement by and between the Company and Anthony Marchese, incorporated by reference to Exhibit 10.6 of our Form 10-K for the period ended August 31, 2009 filed with the SEC on February 8, 2011. | |
| 10.10* | Summary of Dan Gorski Employment Arrangement, incorporated by reference to Exhibit 10.10 of of the Company’s Annual Report on Form 10-K for the period ended August 31, 2019 filed with the SEC on November 27, 2019. | |
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| 10.11* | Summary of Wm. Chris Mathers Employment Arrangement, incorporated by reference to Exhibit 10.11 of of the Company’s Annual Report on Form 10-K for the period ended August 31, 2019 filed with the SEC on November 27, 2019. | |
| 10.12* | Option Agreement for Wm. Chris Mathers incorporated by reference to Exhibit 10.21 of our Amendment No. 2 to its Registration Statement on Form S-1 (333-172116) filed with the SEC on May 25, 2011. | |
| 10.13* | Form of Directors Option Agreement incorporated by reference to Exhibit 10.22 of our Amendment No. 2 to its Registration Statement on Form S-1 (333- 172116) filed with the SEC on May 25, 2011. | |
| 10.14 | Consulting Agreement between the Company and Chemetals, Inc., dated January 22, 2013, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on January 28, 2013. | |
| 10.15 | Lease Agreement between the Company and Southwest Range & Wildlife Foundation, Inc., dated March 6, 2013, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on March 12, 2013. | |
| 10.16 | Variation agreement with Morzev PTY LTD. (USA Rare Earth) dated October 2018, incorporated by reference to Exhibit 10.16 of the Company’s Annual Report on Form 10-K for the period ended August 31, 2019 filed with the SEC on November 27, 2019. | |
| 10.17 | Amended and Restated Option Agreement with Morzev (USA Rare Earth) dated August 2019, incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K for the period ended August 31, 2019 filed with the SEC on November 27, 2019. | |
| 10.18 | First Amendment to the Amended and Restated Option Agreement with USA Rare Earth dated June 29, 2020, incorporated by reference to Appendix A of the definitive proxy statement on Schedule 14A filed with the SEC on July 15, 2020. | |
| 10.19 | Mining lease dated September 2011, incorporated by reference to Exhibit 10.19 of the Form 10-K for the period ended August 31, 2020 filed with the SEC on November 30, 2020. | |
| 10.20 | Contribution Agreement, effective as of May 17, 2021, among USA Rare Earth, LLC, Texas Mineral Resources Corp., and Round Top Mountain Development, LLC, filed with the SEC on Form 8-K on May 21, 2021. | |
| 10.21 | Limited Liability Company Agreement dated effective as of May 17, 2021, among USA Rare Earth, LLC, Texas Mineral Resources Corp., and Round Top Mountain Development, LLC, filed with the SEC on Form 8-K on May 21, 2021. | |
| 10.22 | Mineral Exploration and Option Agreement dated effective October 7, 2021 between Standard Silver Corp. and Santa Fe Gold Corporation, filed with the SEC on Form 8-K on November 10, 2021. | |
| 10.23 | Amended and Restated Limited Liability Company Agreement dated effective as of June 26, 2023, among USA Rare Earth, LLC, Texas Mineral Resources Corp., and Round Top Mountain Development, LLC, filed with the SEC on Form 8-K on June 27, 2023. | |
| 10.24 | First Amendment to Mineral Exploration and Option Agreement dated May 23, 2024 among Standard Silver Corp. and Santa Fe Gold Corporation, filed with the SEC on Form 8-K on May 30, 2024. | |
| 10.25 | Purchase and Sale Agreement by and between Standard Silver Corporation and Daniel E Gorski and Patrice Gorski dated December 3, 2024. | |
| 10.26 | Assignment of shares of common stock by Daniel Gorski to Texas Mineral Resources Corp, incorporated by reference to Exhibit 10.26 of the Company’s quarterly report on Form 10-Q filed with the SEC on January 14, 2026. | |
| 10.27 | Form of Voting and Support Agreement, incorporated by reference to Exhibit 10.1 of the Company’s current report on Form 8-K filed with the SEC on March 5, 2026. | |
| 19.1 | Insider Trading Policy, incorporated by reference to Exhibit 19.1 of the Company’s Annual Report on Form 10-K for the period ended August 31, 2024 filed with the SEC on November 29, 2024. | |
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| 21.1 | List of Subsidiaries, incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K for the period ended August 31, 2024 filed with the SEC on November 29, 2024. | |
| 31.1(1) | Certification by Chief Executive Officer | |
| 31.2(1) | Certification by Chief Financial Officer | |
| 32.1(1) | Section 1350 Certification by Chief Executive Officer | |
| 32.2(1) | Section 1350 Certification by Chief Financial Officer | |
| 101.INS(1) | XBRL Instance Document 101.SCH(1) XBRL Taxonomy Extension – Schema | |
| 101.CAL(1) | XBRL Taxonomy Extension – Calculations 101.DEF(1) XBRL Taxonomy Extension – Definitions 101.LAB(1) XBRL Taxonomy Extension – Labels 101.PRE(1) XBRL Taxonomy Extension – Presentations |
| * | Management contract or compensatory plan or arrangement. |
| (1) | Submitted Electronically Herewith. Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at February 28, 2026 and August 31, 2025; (ii) Consolidated Statements of Operations for the three and six months ended February 28, 2026 and February 28, 2025; (iii) Consolidated Statements of Cash Flows for the six months ended February 28, 2026 and February 28, 2025; (iv) Consolidated Statements of Shareholders’ Equity for the three and six months ended February 28, 2026 and February 28, 2025; and (v) Notes to Consolidated Financial Statements |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
TEXAS MINERAL RESOURCES CORP.
| Date: April 14, 2026 | |
| /s/ Daniel E. Gorski | |
| Daniel E. Gorski, duly authorized officer Chief Executive Officer and Principal Executive Officer |
|
| Date: April 14, 2026 | |
| /s/ Wm Chris Mathers | |
| Wm Chris Mathers, Chief Financial Officer and Principal Financial and Accounting Officer |
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