NOTE 2 – DISCONTINUED OPERATIONS

The Company accounts for discontinued operations in accordance with ASC 205‑20, Presentation of Financial Statements – Discontinued Operations (“ASC 205‑20”).

During the year ended December 31, 2025, the Company completed the spin‑off of its American Infrastructure and ReElement segments through the distribution of approximately 91% and 81%, respectively, of the outstanding equity interests of American Infrastructure Corporation (“AIC”) and ReElement Technologies, Inc. (“RLMT”) to the Company’s shareholders. These transactions resulted in the deconsolidation of AIC and RLMT on December 25, 2025 and December 26, 2025, respectively.

The disposition of AIC and RLMT represented a strategic shift in the Company’s operations. Accordingly, the historical results of these entities have been classified as discontinued operations for all periods presented in the accompanying consolidated financial statements.

Upon deconsolidation, the Company recognized its retained noncontrolling equity interests in RLMT and AIC at fair value in accordance with ASC 810, Consolidation, with the resulting gain (loss) on deconsolidation recognized in earnings.

The spin‑off transactions were non‑cash in nature and did not result in the receipt of cash consideration. Following the spin‑offs, the Company retained noncontrolling ownership interests in both RLMT and AIC. No additional non‑cash consideration was received in connection with the transactions.

Cash flows attributable to the discontinued operations were material to the periods presented. The operating, investing, and financing cash flows related to the discontinued operations are included within the respective line items in the Company’s consolidated statements of cash flows. The spin‑off transactions themselves did not result in cash inflows or outflows.

The following table presents the assets and liabilities of the discontinued operations as of December 31, 2025 and 2024:

The following table represents the major components of the results of discontinued operations for the period ended December 26, 2025 and 2024:

ReElement Technologies, Inc. (“RLMT”)

During the first quarter of 2025, the Company completed a spin‑off of approximately 81% of the ownership interests of RLMT. Following the spin‑off, the Company retained 19% ownership interest in RLMT. Until December 26, 2025, RLMT was considered a variable interest entity and was consolidated within the Company’s consolidated financial statements. As a result of third‑party investments in RLMT and the resulting changes to its capital structure, the Company determined that RLMT no longer qualified as a variable interest entity and deconsolidated RLMT as of December 26, 2025.

The spin‑off of RLMT represented a strategic shift and, accordingly, the disposal of RLMT was classified as a discontinued operation under ASC 205‑20. As a result, the Company recognized a gain on disposal of $28,143,105 on December 26, 2025.

The Company’s retained ownership interest in RLMT is accounted for under the equity method. The fair value of the retained interest recognized at the deconsolidation date was $28,263,734.

The fair value of the retained equity interest in RLMT was determined using a market approach based on an observable, arm’s‑length transaction that occurred contemporaneously with the spin‑off and implied an enterprise value of approximately $150 million for RLMT. The transaction was negotiated between independent third parties and reflected market participant assumptions regarding RLMT’s value as of the deconsolidation date. The implied enterprise value was translated to an equity value based on the Company’s retained ownership interest.

Significant inputs and assumptions included:

No adjustments for lack of control or lack of marketability were applied, as the transaction price was determined to reflect these factors.

The fair value measurement of the retained investment in RLMT is classified as Level 2 within the fair value hierarchy, as it is based on observable inputs from a contemporaneous market transaction.(See Note 7 – Investments in Other Entities – Related Parties for additional information regarding the retained equity method investment in RLMT.)

The following table presents the components of the gain on disposal of subsidiaries resulting from the disposal of RLMT on December 26, 2025:

American Infrastructure Corporation (“AIC”)

During the first quarter of 2025, the Company completed a spin‑off of approximately 91% of its ownership interest in American Infrastructure Corporation (“AIC”). Following the spin‑off, the Company retained a 9% non‑controlling ownership interest in AIC. Prior to December 25, 2025, AIC was considered a variable interest entity and was consolidated within the Company’s consolidated financial statements. On December 25, 2025, the Company determined that it was no longer the primary beneficiary of AIC and deconsolidated the entity.

The spin‑off and subsequent deconsolidation of AIC represented a strategic shift and, accordingly, the disposal was classified as a discontinued operation in accordance with ASC 205‑20. As a result, the Company recognized a gain on disposal of subsidiaries of $66,897,222 on December 25, 2025.

Upon deconsolidation, the Company measured its retained 9% equity interest in AIC at fair value in accordance with ASC 810‑10‑40 and ASC 820. The retained investment was recognized at a fair value of $2,475,258 as of the deconsolidation date and classified as a financial asset.

The fair value of the retained equity interest in AIC was determined using a market approach, consistent with an exit‑price notion under ASC 820. Management concluded that a market approach provided the most reliable basis for estimating fair value given AIC’s development‑stage status, lack of reliable projections, and absence of observable equity transactions at the measurement date.

The valuation was primarily anchored to observable market participant evidence in the form of an non-executed third‑party letter of intent (“LOI”), which contemplated the acquisition of substantially all of AIC’s operating assets by an independent counterparty in an arm’s‑length transaction. The LOI reflected an indicated value of the underlying operating assets on a free‑and‑clear basis and represented the most relevant market participant indication of value available as of the measurement date.

Because the LOI was structured as an asset transaction, management translated the indicated asset‑level value to an equity‑level fair value by considering the liabilities and obligations that a market participant acquiring AIC as a whole would be required to assume or satisfy. Exchange ratios, spin‑off mechanics, implied accounting gains, and internally derived values were explicitly excluded from the valuation analysis due to circularity considerations and their inconsistency with ASC 820’s requirement to maximize observable market participant inputs.

An income approach was considered but not applied due to the absence of reliable cash flow projections, sustained operating losses, and the early‑stage nature of AIC’s operations. An asset‑based approach was evaluated only as a reasonableness check and was not determinative of fair value.

The fair value measurement of the retained investment in AIC is classified as Level 3 within the fair value hierarchy due to the reliance on significant unobservable inputs, including assumptions regarding execution risk, timing, and the translation of asset‑level market participant evidence to an equity‑level fair value.

No separate adjustments for lack of control or lack of marketability were applied, as management concluded that such considerations were appropriately reflected in the market participant evidence and liability profile incorporated in the equity‑level valuation.(See Note 7 – Investments in Other Entities – Related Parties for additional information regarding the retained investment in AIC.)

The following table presents the components of the gain on disposal of AIC on December 25, 2025:

The gain on deconsolidation of RLMT and AIC was determined in accordance with ASC 810‑10‑40 and was based on:

The resulting gain (loss) is included in income from discontinued operations in the consolidated statements of operations.

The following table summarizes the cash flows attributable to discontinued operations:

Net cash used in operating activities from discontinued operations was $7.4 million for the year ended December 31, 2025, compared to $23.2 million for the year ended December 31, 2024, and primarily reflects operating losses and changes in working capital during the wind‑down of the discontinued businesses.

Net cash used in investing activities from discontinued operations was $3.8 million for the year ended December 31, 2025, compared to $126.3 million for the year ended December 31, 2024. Investing activities during both periods primarily related to capital expenditures and investment activity associated with the discontinued operations prior to their disposition.

Net cash provided by financing activities from discontinued operations was $13.5 million for the year ended December 31, 2025, compared to $150.0 million for the year ended December 31, 2024, and primarily reflects financing transactions undertaken in connection with the disposition and wind‑down of the discontinued operations.

Capital expenditures and other significant noncash investing and financing activities related to discontinued operations included purchases of property, plant, and equipment financed through finance leases of $1,849,106 and $1,500,000 for the years ended December 31, 2025 and 2024, respectively. Depreciation and amortization attributable to discontinued operations are included in the results of discontinued operations in the consolidated statements of operations.