USA Rare Earth, Inc. (USAR)

Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.

Unless otherwise noted or the context otherwise
requires, references to the “Company,” “Inflection Point,” “Inflection Point Acquisition Corp. II,”
“our,” “us” or “we” refer to Inflection Point Acquisition Corp. II. The following discussion and analysis
of the Company’s financial condition and results of operations should be read in conjunction with our audited financial statements
and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report.
The term “USARE OpCo” refers to USA Rare Earth, LLC, and the term “New USARE” refers to USA Rare Earth, Inc. after
the consummation of the Business Combination.

The financial information included in this Item
7 is that of Inflection Point prior to the Business Combination because the Business Combination was consummated subsequent to the period
covered by the audited financial statements included in this Annual Report.

Overview

Until March 13, 2025, we were a special purpose
acquisition company incorporated in the Cayman Islands on March 6, 2023, formed for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses. Our intent was to
effectuate a business combination, including the Business Combination, using cash derived from the proceeds of the IPO and the
sale of the private placement warrants, our shares, debt or a combination of cash, our shares and debt.

We incurred significant costs in the pursuit of
our acquisition plans.

Results of Operations

We have neither engaged in any operations nor
generated any revenues through December 31, 2024. Our only activities from March 6, 2023 (inception) through December 31, 2024 were organizational
activities, those necessary to prepare for our IPO, described below, and subsequent to the IPO, identifying a target company for a business
combination and activities in connection with the Business Combination. We did not generate any operating revenues from March 6, 2023
(inception) through December 31, 2024. We generated non-operating income in the form of interest income on cash and cash equivalents and
dividend income on marketable securities held in the trust account established in connection with Inflection Point’s IPO (the “Trust
Account”). We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.

For the year ended December 31, 2024, we had net
income of $7,899,035, which consists of dividend income earned on marketable securities held in the Trust Account of $12,019,932, change
in fair value of Forward Purchase Agreement of $435,568 and interest income from bank of $5,755, partially offset by formation and operating
costs of $4,077,377 and loss on issuance of Forward Purchase Agreements of $484,843.

For the period from March 6, 2023 (inception)
through December 31, 2023, we had net income of $6,748,069, which consists of dividend income earned on marketable securities held in
the Trust Account of $7,721,518 and interest income from bank of $11,763, partially offset by formation and operating costs of $985,212.

Business Combination with USARE

On
August 21, 2024 (the “Signing Date”), Inflection Point entered into that certain Business Combination Agreement by
and among Inflection Point, USARE OpCo and Merger Sub (as amended on November 12, 2024 and January 30, 2025), pursuant to which, among
other things and subject to the terms and conditions contained therein, Merger Sub merged with and into USARE OpCo with
USARE continuing as the surviving company and a direct wholly owned subsidiary of Inflection Point. In connection with the Closing of
the Business Combination, Inflection Point changed its name to “USA Rare Earth, Inc.”.

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The Domestication

Inflection Point, after obtaining the required
shareholder approvals, completed the Domestication, changing its jurisdiction of incorporation by deregistering as a Cayman Islands exempted
company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware. Prior to, but on the same
day as, the Domestication, Inflection Point provided its public shareholders the opportunity to redeem their public shares on the terms
and conditions set forth in the Business Combination Agreement and Inflection Point’s governing documents (the “Redemption”).
The Company redeemed 128,140 public shares in the Redemption.

By virtue of the Domestication and subject to
the satisfaction or waiver of the conditions of the Business Combination Agreement, including approval of Inflection Point’s shareholders:
(i) immediately prior to the Domestication, pursuant to the Sponsor Support Agreement (as defined below) each of the then issued and outstanding
Class B ordinary shares of Inflection Point converted automatically, on a one-for-one basis, into one (1) Class A ordinary share, par
value of $0.0001 per share, of Inflection Point (the “Sponsor Share Conversion”); and (ii) in connection with the Domestication,
(x) each then issued and outstanding Class A ordinary share (that was not redeemed pursuant to the Redemption) converted automatically,
on a one-for-one basis, into one (1) share of Common Stock; (y) each of the then issued and outstanding warrants representing the right
to purchase one Class A ordinary share converted automatically into a New USARE Warrant to acquire one (1) share of Common Stock; and
(z) each of the then issued and outstanding units of Inflection Point was cancelled and each holder thereof became entitled to one share
of Common Stock and one-half (1/2) of one New USARE Warrant.

The Merger and Consideration

Subject to, and in accordance with the terms and
conditions of the Business Combination Agreement, immediately prior to the effective time of the Merger (the “Effective Time”),
(i) each warrant to purchase Class C convertible preferred units of USARE OpCo (the “USARE Class C Convertible Preferred Units”)
or Class C-1 convertible preferred units of USARE OpCo (the “USARE Class C-1 Convertible Preferred Units”) was automatically
exercised on a cashless basis in full in accordance with its terms and (ii) immediately thereafter, each then-issued and outstanding USARE
Class C Convertible Preferred Unit and each then-issued and outstanding USARE Class C-1 Convertible Preferred Unit (including each USARE
Class C Convertible Preferred Unit and USARE Class C-1 Convertible Preferred Unit issued upon the automatic exercise described in the
preceding clause (i)) was automatically converted into such number of Class B units of USARE OpCo (the “USARE Class B Units”)
into which such USARE Class C Convertible Preferred Unit or USARE Class C-1 Convertible Preferred Unit, as applicable, was convertible
in connection with the Merger pursuant to USARE OpCo’s Sixth Amended and Restated Operating Agreement, as amended (the “Pre-Closing
USARE OpCo OA”).

Subject to, and in accordance with the terms and
conditions of the Business Combination Agreement, at the Effective Time:

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Pursuant to the Business Combination Agreement,
the aggregate consideration paid in, or in connection with, the Merger in respect of the outstanding equity securities of USARE OpCo (excluding
the USARE Class A Convertible Preferred Units and the USARE Class A Preferred Investor Warrants) was 72,747,711 shares of Common Stock
(the “Aggregate Base Consideration”). The Aggregate Base Consideration was calculated as (i) the number of shares of
Common Stock equal to the quotient of (a) $800,000,000 divided by (b) the redemption price of $10.99687276. The “Exchange Ratio”
was equal to 0.2043578. The Exchange Ratio was calculated as the Aggregate Base Consideration divided by the sum (without duplication)
of the aggregate number of (i) USARE Class A Units that were issued and outstanding immediately prior to the Effective Time, (ii) USARE
Class B Units that were issued and outstanding immediately prior to the Effective Time (including all USARE Class B Units issued upon conversion
of all outstanding USARE Class C Convertible Preferred Units and USARE Class C-1 Convertible Preferred Units), (iii) all USARE Class A
Units and USARE Class B Units issuable upon full exercise of all issued and outstanding USARE Warrants (calculated using the treasury
method of accounting on a cashless exercise basis), and (iv) all USARE Class A Units and USARE Class B Units issuable upon full exercise,
exchange or conversion of all issued and outstanding USARE Incentive Units (calculated using the treasury method of accounting on a cashless
exercise basis) (such sum, the “USARE Fully Diluted Capital”). At the Effective Time, the USARE Fully Diluted Capital
was 355,983,292 units, consisting of (i) 207,585,648 Class A common units, (ii) 20,778,672 Class B common units, (iii) 22,274,921 common
units deemed issued upon full exercise, exchange or conversion of all issued and outstanding USARE Incentive Units (calculated using the
treasury method of accounting on a cashless exercise basis), (iv) 96,049,828 Class B common units deemed issued upon conversion of all
outstanding USARE Class C Convertible Preferred Units and USARE Class C-1 Convertible Preferred Units, (v) 7,440,828 Class B common units
deemed issued upon full exercise of all issued and outstanding Class B common warrants (calculated using the treasury method of accounting
on a cashless exercise basis), and (vi) 1,853,395 Class B common units deemed issued upon full exercise of all issued and outstanding
Class C common warrants and Class C-1 common warrants (calculated using the treasury method of accounting on a cashless exercise basis).

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The “Earn-out Exchange
Ratio” was 0.028091206. The Earn-out Exchange Ratio was calculated as 10,000,000 shares of Common Stock (the
“Aggregate Earn-out Consideration”) divided by the USARE Fully Diluted Capital. 50% of the Aggregate Earn-out
Consideration will vest and be issued if, during the five year period beginning on the first anniversary of the Closing Date, the
closing sale price of one share of Common Stock as reported on the national securities exchange on which such shares are then listed
is greater than or equal to $15.00 for a period of at least twenty out of thirty consecutive days on which shares of Common Stock
are actually traded on the principal securities exchange or securities market on which shares of Common Stock are then traded (each
a “Trading Day”). The remaining 50% of the Aggregate Earn-out Consideration shall vest and be issued if, during the
period beginning on the first anniversary of the Closing Date and ending on the sixth anniversary of the Closing Date, the closing
sale price of one share of Common Stock as reported on the national securities exchange on which such shares are then listed is
greater than or equal to $20.00 for a period of at least twenty out of thirty consecutive Trading Days. The Aggregate Earn-out
Consideration may also vest upon a transaction or series of transactions the result of which is (a) the acquisition by any person or
“group” (as defined in the Exchange Act of 1934, as amended (the “Exchange Act”)) of persons of
direct or indirect beneficial ownership of securities representing 50% or more of the combined voting power of the then outstanding
securities of New USARE, (b) a merger, consolidation, reorganization or other business combination, however effected, resulting in
any person or “group” (as defined in the Exchange Act) acquiring at least 50% of the combined voting power of the then
outstanding securities of New USARE or the surviving person outstanding immediately after such combination; or (c) a sale of all or
substantially all of the assets of New USARE (“Change of Control”), pursuant to which New USARE or its
shareholders have the right to receive consideration if the implied value per share of Common Stock is equal to or above such price
targets, with the amount of such consideration dependent upon the implied per share value reaching the thresholds discussed above.
Should the implied value per share of Common Stock pursuant to a Change of Control be less than $15.00, then the vesting conditions
discussed above shall no longer apply and no further shares of Common Stock will be issued as Aggregate Earn-out Consideration.

In connection with the Closing:

Series A Preferred Stock Investment

In connection with the transactions contemplated
by the Business Combination Agreement, on the Signing Date, Inflection Point, USARE OpCo and Inflection Point Fund I, LP (“Inflection
Point Fund”), an accredited investor that is an affiliate of Inflection Point and Inflection Point Holdings II LLC (the “Sponsor”)
entered into a Securities Purchase Agreement (the “Series A SPA”). Pursuant to the Series A SPA, Inflection Point Fund
agreed, among other things, to purchase, at Closing, shares of New USARE’s 12% Series A Cumulative Convertible Preferred Stock,
par value $0.0001 per share, having the rights, preferences and privileges set forth in the Series A Preferred Stock Certificate of Designation
(such stock the “Series A Preferred Stock”) and a warrant to purchase a number of shares of Common Stock equal to the
amount of shares into which such shares of Common Stock underlying the Series A Preferred Stock are initially convertible (a “Series
A Preferred Investor Warrant”), for an aggregate purchase price of $9,117,648 (the “Series A Preferred Stock Investment”).
Each share of Series A Preferred Stock has a stated value of $12.00 (the “Stated Value”). Subsequently, on February
3, 2025, Inflection Point Fund pre-funded the Series A Preferred Stock Investment by purchasing an aggregate of 833,333 additional USARE
Class A-2 Convertible Preferred Units and a USARE Class A Preferred Investor Warrant exercisable for an aggregate of 833,333 USARE Class
A Units for an aggregate purchase price of approximately $8.5 million as part of an additional investment into USARE Class A-2 Convertible
Preferred Units. Pursuant to a termination agreement, dated as of January 31, 2025, by and among Inflection Point, USARE and Inflection
Point Fund (the “Series A SPA Termination Agreement”), upon the pre-funding of the Series A Preferred Stock Investment,
the Series A SPA was terminated.

In addition, pursuant to a Securities
Purchase Agreement, dated as of August 21, 2024, as amended on January 22, 2025, by and among Inflection Point, Michael Blitzer (the
Company’s Chairman and then-Chief Executive Officer) and USARE OpCo, Inflection Point agreed to issue at Closing, a number of
shares of Series A Preferred Stock equal to the number of Blitzer Conversion Preferred Shares (as defined in the Proxy
Statement/Prospectus) of Series A Preferred Stock to Mr. Blitzer exchange for his forgiveness of 50% of the then-outstanding balance
of the convertible promissory note issued to him by the Company on August 13, 2024 (the “Convertible Promissory
Note”). This Securities Purchase was Agreement was in substantially the form of the Series A SPA, subject to appropriate
changes to reflect that (i) the consideration to be paid by Mr. Blitzer was his forgiveness of 50% of the then-outstanding balance
of the Convertible Promissory Note and (ii) Mr. Blitzer did not receive a Series A Preferred Investor Warrant for such
forgiveness.

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On March 11, 2025, Inflection Point and USARE
OpCo entered into additional securities purchase agreements with Inflection Point Fund and another accredited investor,
Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B (together with Inflection Point Fund, the “Additional
Series A Cumulative Convertible Preferred Stock Investors”), pursuant to which the Additional Series A Cumulative Convertible
Preferred Stock Investors agreed to purchase an aggregate of (i) 784,314 shares of Series A Preferred Stock and (ii) Series A Preferred
Investor Warrants exercisable for an aggregate of 784,314 shares of Common Stock, subject to adjustment, for an aggregate purchase price
of $8.0 million. This transaction closed as part of the Business Combination on March 13, 2025.

Sponsor Support Agreement

Concurrently with the execution of the Business
Combination Agreement, the Sponsor, Inflection Point and USARE OpCo entered into a sponsor support agreement (the “Sponsor Support
Agreement”), pursuant to which, among other things, the Sponsor agreed to (i) vote to adopt and approve the Business Combination
Agreement and the other documents contemplated therein and the transactions contemplated therein and (ii) forfeit 60,000 New USARE Warrants
for every $1,000,000 by which (x) the gross proceeds at the Closing from the Trust Account (after giving effect to the Redemption plus
(y) the gross proceeds from the Class A Preferred Unit Investment (as defined in the UASRE Business Combination Agreement), the Series
A Preferred Stock Investment and any PIPE Investment (as defined in the Business Combination Agreement) are below $50,000,000, up to a
maximum of 1,500,000 New USARE Warrants forfeited. On January 31, 2025, the Sponsor, Inflection Point and USARE OpCo entered into an amendment
to the Sponsor Support Agreement to eliminate the potential forfeiture of New USARE Warrants by the Sponsor.

Member Support Agreement

Concurrently with the execution of the Business
Combination Agreement, Inflection Point entered into a member support agreement (the “Member Support Agreement”) with
USARE OpCo and certain members of USARE OpCo (the “Supporting USARE Members”) pursuant to which each such Supporting
USARE Members agreed to, among other things, support and vote in favor of the Business Combination Agreement, and the transactions contemplated
therein (including the Merger).

Fee Reduction Agreement

Pursuant to that certain underwriting agreement
between Inflection Point and Cantor Fitzgerald & Co., as representative of the several underwriters (“CF&CO”),
dated May 24, 2023 (as it may be amended from time to time, the “Underwriting Agreement”), Inflection Point previously
agreed to pay to CF&CO an aggregate cash amount of $13,100,000 as “deferred underwriting commissions” (the “Original
Deferred Fee”) upon the consummation of an initial business combination, as contemplated by the final prospectus of Inflection
Point, filed with the SEC (File No. 333- 271128), and dated May 24, 2024. Solely in connection with the Business Combination, Inflection
Point, CF&CO and USARE OpCo entered into that certain fee reduction agreement, dated as of August 20, 2024 (the “Fee Reduction
Agreement”), pursuant to which, upon consummation of the Business Combination, CF&CO accepted, in lieu of such Original
Deferred Fee: (i) either (at Inflection Point’s option) (A) a cash fee of $4,000,000 or (B) (1) a cash fee of $2,000,000 plus (2)
400,000 shares of Common Stock, plus (ii) 2.0% of the amount by which the Total Capital Raised (as defined in the Fee Reduction Agreement)
exceeded $50,000,000. Additionally, solely if Inflection Point elected to pay the all-cash fee discussed above, CF&CO would forfeit
1,650,000 private placement warrants. In connection with the Closing of the Business Combination, Inflection Point elected to pay, and
paid the all-cash fee discussed above, and CF&CO forfeited 1,650,000 warrants.

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Amendment No. 1 to Business Combination Agreement

On November 12, 2024, Inflection Point and USARE
OpCo entered into that certain Amendment No. 1 to the Business Combination Agreement (the “BCA Amendment”). The BCA
Amendment:

(i) amends Section 2.02(b) and Section 2.03(b)(iii)
to provide that in connection with the Business Combination, each USARE Class A Preferred Investor Warrant shall be cancelled and converted
into the right to receive a Domesticated Purchaser Series A Preferred Investor Warrant (as defined in the Business Combination Agreement)
exercisable for a number of shares of Common Stock of New USARE equal to the aggregate number of Class A units of USARE OpCo that would
be issued upon full exercise of such USARE Class A Preferred Investor Warrant; and

(ii) amends Article X to define the term “Expiration
Time” with respect to the Member Support Agreement (as defined in the Business Combination Agreement) to mean the earlier of the
Closing or the termination of the Business Combination Agreement.

Amendment No. 2 to the Business Combination
Agreement

On January 30, 2025, Inflection Point and USARE
OpCo entered into that certain Amendment No. 2 to the Business Combination Agreement to, among other matters, set out the directors of
the New USARE, address certain other governance matters and modify certain document delivery conditions.

Forward Purchase Agreements

On March 11, 2025, Inflection Point and USARE
OpCo entered into (i) a forward purchase agreement with Harraden Circle Investors LP, Harraden Circle Special Opportunities LP and Harraden
Circle Strategic Investments LP (collectively, “Harraden,” and such agreement, the “Harraden Forward Purchase
Agreement”), (ii) a forward purchase agreement with Newtyn TE Partners, LP and Newtyn Partners, LP (collectively, “Newtyn,”
and such agreement, the “Newtyn Forward Purchase Agreement”), and (iii) a forward purchase agreement with L1 Capital
Global Opportunities Master Fund (“L1,” and such agreement, the “L1 Forward Purchase Agreement,”
and together with the Harraden Forward Purchase Agreement and the Newtyn Forward Purchase Agreement, the “Forward Purchase Agreements”),
each for over-the-counter Equity Prepaid Forward Transactions (each, a “Forward Purchase Transaction” and, together,
the “Forward Purchase Transactions”). Each Forward Purchase Agreement amended, restated and superseded in its entirety
a separate forward purchase agreements with each of the sellers, dated March 10, 2025, which had identical terms to those described herein,
except that the Reset Price (as defined in the Forward Purchase Agreements) was not subject to the floor price described below. For purposes
of the Forward Purchase Agreements, each of Harraden, Newtyn and L1 are referred to, individually, as a “Seller” and,
collectively, as the “Sellers”). For purposes of the Forward Purchase Agreements, Inflection Point and USARE OpCo are
referred to as the “Counterparty” prior to and after the Business Combination, respectively.

Pursuant to the terms of the Forward Purchase
Agreements, (i) Harraden agreed to hold up to 892,825 public shares, (ii) Newtyn agreed to hold up to 700,000 public shares, and (iii)
L1 agreed to hold up to 297,669 public shares in connection with the Closing. For purposes of the Forward Purchase Agreements, the public
shares held by each Seller are referred to as such Seller’s “FPA Shares.” Each Seller, acting separately
and solely for its own account, was permitted, if necessary, to (i) reverse its previous election to redeem its public shares in connection
with the Business Combination pursuant to the redemption rights set forth in Inflection Point’s amended and restated memorandum
and articles of association or (ii) purchase public shares through a broker in the open market from holders of public shares (other than
Inflection Point), including from holders who previously elected to redeem their public shares in connection with the Business Combination
pursuant to the redemption rights set forth in Inflection Point’s amended and restated memorandum and articles of association. The
aggregate number of shares subject to each Forward Purchase Agreement (the “Number of Shares”) was the aggregate number
of FPA Shares as notified to Counterparty by the applicable Seller, but in no event more than such Seller’s number of FPA Shares
set forth above. Each Seller notified the Counterparty that it would subject the maximum Number of Shares to their respective Forward
Purchase Agreements. The Number of Shares was subject to reduction following the full or partial optional early termination of the Forward
Purchase Agreements as described below.

Each Forward Purchase Agreement provides that
no later than the earlier of (a) one business day after the Closing and (b) the date any assets from Inflection Point’s trust account
are disbursed in connection with the Business Combination, the Seller under such Forward Purchase Agreement was paid directly, out of
the funds held in Inflection Point’s trust account, an amount (the “Prepayment Amount”) equal to the product
of (i) the Number of Shares and (ii) an amount (the “Initial Price”) equal to the redemption price per share payable
to investors who elected to redeem in connection with the Business Combination.

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From time to time on any day the Nasdaq is open
for trading following the date of the Closing (any such date, an “OET Date”), each Seller may, in its absolute discretion,
elect to sell any and all FPA Shares it owns. Any such sale shall automatically terminate such Seller’s Forward Purchaser Transaction
in whole or in part with respect to any such number of sold shares. Seller shall, on any day of such OET Date, give written notice to
the Counterparty of such termination and specify the number of sold FPA Shares (such quantity, the “Terminated Shares”).
As of each OET Date, the Counterparty shall be entitled from Seller, and the Seller shall pay to the Counterparty, an amount equal to
the product of (a) the then in effect Reset Price (as defined in the Forward Purchase Agreement and subject to a floor of $4.00) and (b)
the number of Terminated Shares.

Each Forward Purchase Agreement’s maturity
date is the date 90 days after the Closing (the “Maturity Date”). Upon the occurrence of the Maturity Date, in exchange
for delivery of the then Number of Shares under each Forward Purchase Transaction, the Counterparty shall pay each Seller an amount (the
“Maturity Consideration”) equal to (i) the number of FPA Shares less the number of Terminated Shares multiplied by
(ii) the Initial Price. The Seller will retain the Maturity Consideration from the Prepayment Amount paid by the Counterparty to the Seller.

Each of the Forward Purchase Agreements could
be terminated by any of the parties thereto if any of the following events occur: (a) it being, or, as a consequence of a change in law,
regulation or interpretation, it becomes or will become, unlawful for the Seller to perform any of its obligations contemplated by a Forward
Purchase Agreement, or (b) upon the occurrence of any Material Adverse Change (as defined in the Forward Purchase Agreements) of the Counterparty.
Upon any termination that occurs following the Closing due to clauses (a) or (b) above, Counterparty shall be obligated to promptly accept
for redemption all of Seller’s shares in exchange for the Initial Price.

Closing of the Business Combination

The Business Combination closed on March 13, 2025.
For additional information regarding the USARE Business Combination see the Company’s Current Report on Form 8-K (File No. 001-41711)
filed by New USARE on March 19, 2025, and the Proxy Statement/Prospectus.

Liquidity, Capital Resources and Going Concern

Until the consummation of the IPO, our only source
of liquidity was an initial purchase of shares of Class B ordinary shares, par value $0.0001 per share, by the Sponsor and loans from
the Sponsor.

On May 30, 2023, we consummated the IPO of 25,000,000
Units, which included the partial exercise by the underwriters of their over-allotment option in the amount of 3,000,000 Units, at $10.00
per Unit, generating gross proceeds of $250,000,000. Simultaneously with the closing of the IPO, we consummated the sale of 7,650,000
private placement warrants to the Sponsor and CF&CO, the representative of the underwriters of the IPO, at a price of $1.00 per private
placement warrant, generating gross proceeds of $7,650,000.

Following the IPO and the private placements,
a total of $251,250,000 ($10.05 per Unit) was placed in the Trust Account. We incurred transaction costs of $18,361,877 consisting of
$4,400,000 of cash underwriting discount, $13,100,000 of deferred underwriting fees, and $861,877 of other offering costs.

For the year ended December 31, 2024, cash used
in operating activities was $1,398,564. Net income of $7,899,035 was affected by dividend income earned on marketable securities held
in the Trust Account of $12,019,932, change in fair value of Forward Purchase Agreement of $435,568 and loss on issuance of Forward Purchase
Agreements of $484,843. Changes in operating assets and liabilities used $2,673,058 of cash for operating activities.

As of December 31, 2024, we had marketable securities
held in the Trust Account of $24,075,435 consisting of U.S. government treasury obligations with maturity of 185 days or less or interests
in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government
treasury obligations. We were permitted withdraw interest from the Trust Account to pay taxes, if any. We intended to use substantially
all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting
commissions and taxes payable), to complete our initial business combination.

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As of December 31, 2024, we had cash of $2,101.
Prior to the Business Combination, our intent was to use the funds held outside the Trust Account primarily to identify and evaluate
target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar
locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective
target businesses, structure, negotiate and complete a business combination, to pay for directors and officers liability insurance premiums
and to pay an aggregate of $27,083 per month (the “Monthly Fee”) to The Venture Collective LLC (“TVC”),
an affiliate of one of our directors, Nicholas Shekerdemian, for the services of Peter Ondishin, Chief Financial Officer, and Kevin Shannon,
Chief of Staff. On March 28, 2024, we entered into the Amendment to the Services and Indemnification Agreement, pursuant to which, the
Monthly Fee paid to TVC, effective as of January 1, 2024, was reduced from $27,083 to (i) $17,708 for the period from January 1, 2024
to January 31, 2024 and (ii) $24,091 for the period starting February 1, 2024. On August 9, 2024, the Company entered into the Amendment
to the Services and Indemnification Agreement pursuant to which, the Monthly Fee paid to TVC, effective as of April 1, 2024, was reduced
from $24,091 to $18,882 for the period starting April 1, 2024. The Monthly Fee was further reduced from $18,882 to $14,746 for the period
starting September 1, 2024. On November 8, 2024, the Company entered into the Third Amendment to the Services and Indemnification Agreement
pursuant to which, the Monthly Fee paid to TVC, effective as of November 1, 2024, was reduced from $14,746 to $7,373 for the period starting
October 1, 2024. Upon completion of the Business Combination, the Company ceased paying the Monthly Fee. For the year
ended December 31, 2024 and for the period from March 6, 2023 (inception) through December 31, 2023, the Company incurred $204,541 and
$196,806 for these services, respectively.

In order to finance working capital or to finance
transaction costs in connection with an intended initial business combination, the Sponsor or an affiliate of the Sponsor or certain of
the Company’s officers and directors was permitted, but not obligated to, loan the Company funds as may be required (the “Working
Capital Loans”). In the event that the initial Business Combination did not close, the Company was permitted to use a portion
of the working capital held outside the Trust Account to repay the Working Capital Loans but no proceeds from the Trust Account would
have been used to repay the Working Capital Loans. Up to $1,500,000 of the Working Capital Loans was convertible into private placement
warrants of the post Business Combination entity at a price of $1.00 per private placement warrant at the option of the lender. Such warrants
would have been identical to the private placement warrants.

On August 13, 2024, to document existing and future
Working Capital Loans, the Company issued the Convertible Promissory Note to Michael Blitzer, the Company’s Chairman and then-Chief Executive Officer,
pursuant to which the Company was permitted to borrow up to $2,500,000 from Mr. Blitzer, related to ongoing expenses reasonably related to the business
of the Company and the consummation of an initial business combination.

All unpaid principal under the Convertible Promissory
Note was due and payable in full on the earlier of (i) August 21, 2025, or such later date by which the Company must consummate a Business
Combination pursuant to its governing documents (as may be amended by a shareholder vote) and (ii) the effective date of an initial business combination,
unless accelerated upon the occurrence of an event of default as set forth in the Convertible Promissory Note. Mr. Blitzer had the option,
at any time on or prior to the repayment of amounts owed under the Convertible Promissory Note, to convert up to $1,500,000 outstanding
under the Convertible Promissory Note into warrants to purchase Class A ordinary shares at a conversion price of $1.00 per warrant, with
each warrant entitling the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to the same adjustments
applicable to the private placement warrants. As of December 31, 2024, we had an outstanding borrowing of $1,200,000 under the Convertible
Promissory Note.

Pursuant to a Securities Purchase Agreement, dated
as of August 21, 2024, as amended on January 22, 2025, by and among Inflection Point, Michael Blitzer and USARE OpCo, Inflection Point
agreed to issue at Closing, a number of shares of Series A Preferred Stock equal to the number of Blitzer Conversion Preferred Shares
(as defined in below) to Mr. Blitzer exchange for his forgiveness of 50% of the then-outstanding balance of the
Convertible Promissory Note. In addition, pursuant to a Securities Purchase Agreement, dated as of August 21, 2024, by and between USARE
OpCo and Mr. Blitzer, USARE OpCo issued 122,549 USARE Class A-2 Convertible Preferred Units and a warrant to purchase up to 31,250 USARE
Class A Units in exchange for Mr. Blitzer’s promise to forgive, at the closing of the Proposed Business Combination, the other 50%
of the then-outstanding balance of the Convertible Promissory Note. Such amounts were forgiven upon the Closing for the consideration
described above.

46

As of December 31, 2024, we believed that amounts
not held in trust were not sufficient to pay the costs and expenses that are payable prior to the
closing of our initial business combination. Our costs were primarily expected to be incurred in connection with identifying a target
business, undertaking in-depth due diligence and negotiating a business combination. As of December 31, 2024, our officers, directors
and our Sponsor were permitted, but not obligated to, loan us funds as may be required. Accordingly, we may not be able to obtain additional
financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could
include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead
expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. These
conditions raise substantial doubt about our ability to continue as a going concern for a reasonable period of time which is considered
to be one year from the date of the issuance of the financial statements, or, if earlier, the date that we would have been required to
cease all operations, except for the purpose of winding up, if a business combination was not consummated. The financial statements do
not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary
should we be unable to continue as a going concern.

On March 13, 2025, Inflection Point consummated
the Business Combination with USARE OpCo and substantially all of the assets and the business of the combined company are held and
operated by New USARE and its subsidiaries. New USARE has generated no revenues since inception, continues to incur losses from operations,
and has an accumulated deficit. Following the Closing, New USARE’s ability to continue as a going concern is dependent upon its
ability to raise capital, to implement its business plan, generate sufficient revenues, and to control operating expenses. As of March
28, 2025, New USARE had cash of approximately $23.4 million.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of December 31, 2024. We do not participate in transactions that create relationships
with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established
for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual obligations

As of December 31, 2024, we did not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an aggregate of $27,083 per month to
TVC, for the services of Peter Ondishin, Chief Financial Officer, and Kevin Shannon, Chief of Staff. We began incurring such fees on May
24, 2023, and no longer incur these fees monthly as of the consummation of the Business Combination. On March 28, 2024, Inflection Point
entered into the Amendment to the Services and Indemnification Agreement pursuant to which, the Monthly Fee paid to TVC, effective as
of January 1, 2024, was reduced from $27,083 to (i) $17,708 for the period from January 1, 2024 to January 31, 2024 and (ii) $24,091 for
the period starting February 1, 2024. On August 9, 2024, Inflection Point entered into the Amendment to the Services and Indemnification
Agreement pursuant to which, the Monthly Fee paid to TVC, effective as of April 1, 2024, was reduced from $24,091 to $18,882 for the period
starting April 1, 2024. The Monthly Fee was further reduced from $18,882 to $14,746 for the period starting September 1, 2024. On November
8, 2024, Inflection Point entered into the Third Amendment to the Services and Indemnification Agreement pursuant to which, the Monthly
Fee paid to TVC, effective as of November 1, 2024, was reduced from $14,746 to $7,373 for the period starting October 1, 2024. Upon consummation
of the Business Combination, the Company ceased paying the Monthly Fee.

The underwriters were entitled to a deferred underwriting
commission of 5.0% on the base deal and an additional 7.0% on the Units sold pursuant to the underwriters’ option to purchase additional
Units, or $13,100,000 in the aggregate, of the gross proceeds of the IPO held in the Trust Account upon the completion of Inflection Point’s
initial business combination subject to the terms of the underwriting commission.

47

Pursuant to the Fee Reduction Agreement, solely
in connection with the Business Combination, upon consummation of the Business Combination, CF&CO accepted, in lieu of such Original
Deferred Fee: (i) either (at Inflection Point’s option) (A) a cash fee of $4,000,000 or (B) (1) a cash fee of $2,000,000 plus (2)
400,000 shares of Common Stock, plus (ii) 2.0% of the amount by which the Total Capital Raised (as defined in the Fee Reduction Agreement)
exceeded $50,000,000. Additionally, solely if Inflection Point elected to pay the all-cash fee discussed above, CF&CO agreed to forfeit
1,650,000 private placement warrants. We elected to pay the all-cash fee discussed above and such payment was made and such private placement
warrants were forfeited in connection with the Closing of the Business Combination.

Critical Accounting Policies

The preparation of financial statements and related
disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.
We have identified the following critical accounting policies:

Net Income per Share

Net income per share is computed by dividing net
income by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture.
Weighted average shares were reduced for the effect of an aggregate of 825,000 Class B ordinary shares that were subject to forfeiture
if the over-allotment option was not exercised by the underwriters. At December 31, 2024 and 2023, Inflection Point did not have any dilutive
securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings
of Inflection Point. As a result, diluted income per share is the same as basic income per share for the periods presented.

Recent Accounting Standards

In November 2023, the FASB issued ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures, on an annual
and interim basis, of significant segment expenses that are regularly provided to the chief operating officer decision maker (“CODM”),
as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that
a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment
profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all
annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide
all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280. This ASU is effective for fiscal
years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption
permitted.

Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on Inflection Point’s financial
statements.

Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.

References to the “Company,” “Inflection
Point Acquisition Corp. II,” “our,” “us” or “we” refer to Inflection Point Acquisition Corp.
II. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction
with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary
Data” of this Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors,
including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors”
and elsewhere in this Annual Report.

Overview

We are a SPAC incorporated in the Cayman Islands
on March 6, 2023, formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or other
similar business combination with one or more businesses. We intend to effectuate our business combination using cash derived from the
proceeds of the IPO and the sale of the Private Placement Warrants, our shares, debt or a combination of cash, our shares and debt.

We expect to continue to incur significant
costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.

45

Results of Operations

We have neither engaged in any
operations nor generated any revenues to date. Our only activities from March 6, 2023 (inception) through December 31, 2023 were
organizational activities, those necessary to prepare for our IPO, described below, and subsequent to the IPO, identifying a target
company for a business combination. We do not expect to generate any operating revenues until after the completion of our business
combination. We generate non-operating income in the form of dividend income on marketable securities held in the Trust Account. We
incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well
as for due diligence expenses.

For the period from March 6, 2023
(inception) through December 31, 2023, we had net income of $6,748,069, which consists of dividend income earned on marketable
securities held in the Trust Account of $7,721,518 and interest income from bank of $11,763, partially offset by formation and
operating costs of $985,212.

Liquidity and Capital Resources

Until the consummation of the IPO, our only source
of liquidity was an initial purchase of shares of Class B ordinary shares, par value $0.0001 per share, by the Sponsor and loans
from the Sponsor.

On May 30, 2023, we consummated the IPO of
25,000,000 Units, which included the partial exercise by the underwriters of their over-allotment option in the amount of 3,000,000 Units,
at $10.00 per Unit, generating gross proceeds of $250,000,000. Simultaneously with the closing of the IPO, we consummated the sale of
7,650,000 Private Placement Warrants to the Sponsor and Cantor Fitzgerald & Co., the representative of the underwriters of the IPO,
at a price of $1.00 per Private Placement Warrant, generating gross proceeds of $7,650,000.

Following the IPO and the private placements,
a total of $251,250,000 ($10.05 per Unit) was placed in the Trust Account. We incurred transaction costs of $18,361,877 consisting of
$4,400,000 of cash underwriting discount, $13,100,000 of deferred underwriting fees, and $861,877 of other offering costs.

For the period from March 6, 2023
(inception) through December 31, 2023, cash used in operating activities was $948,006. Net income of $6,748,069 was affected by
dividend income earned on marketable securities held in the Trust Account of $7,721,518 and formation costs paid by the Sponsor in
exchange for issuance of Class B Ordinary shares of $5,845. Changes in operating assets and liabilities provided $19,598 of cash for
operating activities.

As of December 31, 2023, we had marketable securities
held in the Trust Account of $258,971,518 consisting of investments in money market funds. We may withdraw interest from the Trust Account
to pay taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest
earned on the Trust Account (less deferred underwriting commissions and taxes payable), to complete our initial business combination.
To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination,
the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.

As of December 31, 2023, we had cash of $275,665.
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence
on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their
representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and
complete a business combination, to pay for directors and officers liability insurance premiums and to pay an aggregate of $27,083 per
month to The Venture Collective LLC (“TVC”), an affiliate of one of our directors, Nicholas Shekerdemian, for the services
of Peter Ondishin, Chief Financial Officer, and Kevin Shannon, Chief of Staff. On March 28, 2024, we entered into the Amendment to the
Services and Indemnification Agreement, pursuant to which, the Monthly Fee paid to TVC, effective as of January 1, 2024, was reduced from
$27,083.33 to (i) $17,708.33 for the period from January 1, 2024 to January 31, 2024 and (ii) $24,091 for the period starting February
1, 2024.

In order to finance working capital or to finance
transaction costs in connection with an intended initial business combination, the Sponsor or an affiliate of the Sponsor or certain of
the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes
an initial business combination, the Company would repay the working capital loans (the “Working Capital Loans). In the event that
the initial business combination does not close, the Company may use a portion of the working capital held outside the Trust Account to
repay the Working Capital Loans but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $1,500,000
of the Working Capital Loans may be convertible into private placement warrants of the post business combination entity at a price of
$1.00 per private placement warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants.

46

We
believe that amounts not held in trust is not sufficient to pay the costs and expenses to which such proceeds are allocated that are
payable prior to the closing of our initial business combination. However, if our estimate of the costs of identifying a target business,
undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may
have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain
additional financing either to complete our business combination or because we become obligated to redeem a significant number of our
Public Shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection
with such business combination.

We may need to raise additional capital through
loans or additional investments from our Sponsor, shareholders, officers, directors, or third parties. Our officers, directors and our
Sponsor may, but are not obligated to, loan us funds as may be required. Accordingly, we may not be able to obtain additional financing.
If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include,
but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses.
We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all. These conditions
raise substantial doubt about our ability to continue as a going concern for a reasonable period of time which is considered to be one
year from the date of the issuance of the financial statements, or, if earlier, the date that we will be required to cease all operations,
except for the purpose of winding up, if a business combination is not consummated. The financial statements do not include any adjustments
relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to
continue as a going concern.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of December 31, 2023. We do not participate in transactions that create relationships
with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established
for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual obligations

We do not have any long-term debt, capital lease
obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an aggregate of $27,083 per month to
TVC, for the services of Peter Ondishin, Chief Financial Officer, and Kevin Shannon, Chief of Staff. We began incurring such fees on May
24, 2023, and will continue to incur these fees monthly until the earlier of the completion of a business combination or our liquidation.
On March 28, 2024, we entered into the Amendment to the Services and Indemnification Agreement pursuant to which, the Monthly Fee paid
to TVC, effective as of January 1, 2024, was reduced from $27,083.33 to (i) $17,708.33 for the period from January 1, 2024 to January
31, 2024 and (ii) $24,091 for the period starting February 1, 2024. Upon completion of a business combination or its liquidation, we will
cease paying the Monthly Fee.

The underwriters are entitled to a deferred underwriting
commission of 5.0% on the base deal and an additional 7.0% on the Units sold pursuant to the underwriters’ option to purchase additional
Units, or $13,100,000 in the aggregate, of the gross proceeds of the IPO held in the Trust Account upon the completion of the Company’s
initial business combination subject to the terms of the underwriting commission.

Critical Accounting Policies

The preparation of financial statements and related
disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date
of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates.
We have identified the following critical accounting policies:

Net Income per Share

Net income per share is computed by dividing net
income by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture.
Weighted average shares were reduced for the effect of an aggregate of 825,000 Class B ordinary shares that were subject to forfeiture
if the over-allotment option was not exercised by the underwriters. At December 31, 2023, the Company did not have any dilutive securities
and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company.
As a result, diluted income per share is the same as basic income per share for the periods presented.

Recent Accounting Standards

Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial
statements.