10-Q 1 rmri-20231231x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended December 31, 2023

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: 0-55402

Rocky Mountain Industrials, Inc. (formerly RMR Industrials, Inc.)

(Exact name of registrant as specified in its charter)

Nevada

    

46-0750094

(State or jurisdiction of incorporation or organization) 

(IRS Employer Identification No.) 

6200 South Syracuse Way, Suite 450

Greenwood Village, CO 80111

(Address of principal executive offices)

(720) 614-5213

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

N/A

N/A

N/A

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 preceding 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. Yes No

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Smaller reporting company

Emerging growth company 

 

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   No

As of February 13, 2024, the registrant had 35,785,858 shares of Class A Common Stock, 4,973,832 shares of Class B Common Stock outstanding and 118.5 shares of Preferred Stock outstanding.

ROCKY MOUNTAIN INDUSTRIALS, INC.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are “forward-looking statements.” Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plan, including product and service developments, future financial conditions, results or projections or current expectations. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “estimates,” “intends,” “plan,” “expects,” “may,” “will,” “should,” “predicts,” “anticipates,” “continues,” or “potential,” or the negative thereof or other variations thereon or comparable terminology, and similar expressions are intended to identify forward-looking statements. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, achievements, or industry results, expressed or implied by such forward-looking statements. Such uncertainties and risks include those discussed in the “Risk Factors” and similar sections of our Annual Report on Form 10-K for the year ended March 31, 2023 and our other filings with the Securities and Exchange Commission, all of which are incorporated by reference herein. Forward-looking statements appear in Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as elsewhere in this Quarterly Report.

Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim 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 except as otherwise required by law.

Unless otherwise specified or required by context, as used in this Report, the terms “we,” “our,” “us” and the “Company” refers collectively to Rocky Mountain Industrials, Inc.,  (“RMI”) formerly RMR, Industrials, Inc., and its wholly/majority-owned subsidiaries, RMR Aggregates, Inc., RMR Logistics, Inc., and Rail Land Company, LLC. Unless otherwise indicated, the term “common stock” refers to shares of our Class A Common Stock and Class B Common Stock.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with generally accepted accounting principles in the United States (GAAP).

2

CAUTIONARY NOTE REGARDING EXPLORATION STAGE STATUS

AND USE OF CERTAIN MINING TERMS

We are considered an “exploration stage” company under the U.S. Securities and Exchange Commission (“SEC”) Regulation S-K 1300, Disclosure by Registrants Engaged or to be Engaged in Mining Operations (“S-K 1300”), because we do not have mineral reserves as defined under S-K 1300. Mineral reserves are defined in S-K 1300 as that part of a measured mineral resource which can be economically and legally extracted or produced at the time of the mineral reserve determination. The establishment of a mineral resource under S-K 1300 is, among other things, a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled. Since we have no mineral reserves as defined in S-K 1300, we have not exited the exploration stage and continue to report our financial information as an exploration stage entity as required under relevant accounting principles. We will remain an exploration stage company under S-K 1300 until such time as we demonstrate mineral reserves in accordance with the criteria in S-K 1300.

Since we have no mineral reserves, we will expense all mine construction costs, even though these expenditures are expected to have a future economic benefit in excess of one year. We will also expense our reclamation and remediation costs at the time the obligation is incurred. Companies that have mineral reserves and have exited the exploration stage typically capitalize these costs, and subsequently amortize them on a units-of-production basis as mineral reserves are mined, with the resulting depletion charge allocated to inventory, and then to cost of sales as the inventory is sold. As a result of these and other differences, our financial statements will not be comparable to the financial statements of mining companies that have established mineral reserves and have exited the exploration stage.

We use certain terms in this report such as “production,” “mining or processing activities,” and “mine construction.” Production means the estimated quantities (tonnage) delivered or shipped to our customers, which may result in disclosure of related limestone and dolomite sales. Mining or processing activities means the process of extracting limestone and dolomite from the earth and treating that material. Mine construction means work carried out to access areas in the mine containing limestone and dolomite, which principally includes road construction, ramp construction and ancillary activities. We use these terms in this report since we believe they are necessary and helpful for the reader to understand our business and operations. However, we caution you that we do not have mineral reserves and therefore have not exited the exploration stage as defined in S-K 1300, and our use of the terminology described above is not intended to indicate that we have established reserves or have exited the exploration stage for purposes of S-K 1300. Furthermore, since we do not have mineral reserves, we cannot provide any indication or assurance as to how long we will likely continue mining activities at our mine site or whether such activities will be profitable.

3

ROCKY MOUNTAIN INDUSTRIALS, INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

 

Condensed Consolidated Balance Sheets as of December 31, 2023 and March 31, 2023

5

Condensed Consolidated Statements of Operations for the three and nine months ended December 31, 2023 and 2022

6

Statement of Changes in Stockholder Equity for the three and nine months ended December31, 2023 and 2022

7

Condensed Consolidated Statements of Cash Flows for the nine months ended December31, 2023 and 2022

9

Notes to Condensed Consolidated Financial Statements

10

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

17

 

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

19

 

ITEM 4.

CONTROLS AND PROCEDURES

19

 

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

20

 

ITEM 1A.

RISK FACTORS

20

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

20

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

20

 

ITEM 4.

MINE SAFETY DISCLOSURES

20

 

ITEM 5.

OTHER INFORMATION

20

 

ITEM 6.

EXHIBITS

21

4

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ROCKY MOUNTAIN INDUSTRIALS, INC.

Condensed Consolidated Balance Sheets (Unaudited)

December 31, 

March 31, 

    

2023

    

2023

ASSETS

 

  

 

  

Current assets

 

  

 

  

Cash

$

3,115,619

$

3,528,858

Accounts receivable

 

48,316

 

53,604

Other receivables

859,722

2,647,268

Inventory

 

75,832

 

102,243

Prepaid expenses

 

2,883,227

 

1,251,644

Total current assets

 

6,982,716

 

7,583,617

Property, plant, and equipment, net

 

2,054,684

 

2,233,971

Land under development

 

24,137,831

 

14,939,567

Right of use asset

358,999

417,734

Asset retirement obligation, net

 

62,620

 

66,264

Other intangibles, net

 

41,000

 

41,000

Restricted cash

185,530

185,530

Deposits and other assets

 

35,090

 

35,090

Total assets

$

33,858,470

$

25,502,773

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

Current liabilities

 

  

 

  

Accounts payable

$

3,740,616

$

7,576,480

Accrued liabilities

 

175,414

 

147,621

Accrued liabilities, related party

 

2,202,500

 

1,877,500

Dividends payable

2,151,345

1,742,869

Debt due within one year

49,000

40,969

Lease liability, current

90,100

78,960

Total current liabilities

 

8,408,975

 

11,464,399

Debt due after one year

20,348,445

13,512,824

Lease liability, long-term

329,101

406,784

Accrued reclamation liability

 

155,296

 

144,707

Total liabilities

 

29,241,817

 

25,528,714

Commitments and Contingencies

Stockholders’ Equity (Deficit)

 

  

 

  

Preferred Stock Series A-1, $0.001 par value, 50,000,000 shares authorized: 48.27 shares issued and outstanding on December 31, 2023 and March 31, 2023

 

4,827,000

 

4,827,000

Preferred Stock Series A-2, $0.001 par value, 50,000,000 shares authorized: 19.45 issued and outstanding on December 31, 2023 and March 31, 2023

1,950,000

1,950,000

Preferred Stock Series A-3, $0.001 par value, 50,000,000 shares authorized: 50.75 issued and outstanding on December 31, 2023 and March 31, 2023

5,075,140

5,075,140

Class A Common Stock, $0.001 par value; 2,000,000,000 shares authorized; 35,785,858 shares issued and outstanding on December 31, 2023 and March 31, 2023

 

35,786

 

35,786

Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 4,973,832 shares issued and outstanding on December 31, 2023 and March 31, 2023

 

4,975

4,975

Additional paid-in capital

 

61,871,409

 

60,783,824

Accumulated deficit

 

(69,147,657)

 

(72,702,666)

Total stockholders’ equity (deficit)

4,616,653

(25,941)

Total liabilities and stockholders’ equity (deficit)

$

33,858,470

$

25,502,773

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

ROCKY MOUNTAIN INDUSTRIALS, INC.

Condensed Consolidated Statements of Operations (Unaudited)

For the three months ended

For the nine months ended

December 31, 

December 31, 

    

2023

    

2022

    

2023

    

2022

Revenue

$

116,713

$

243,303

$

453,085

$

714,884

Cost of goods sold

 

78,762

 

350,179

 

396,003

 

921,324

Gross profit (loss)

 

37,951

 

(106,876)

 

57,082

 

(206,440)

Selling, general and administrative (includes depreciation, depletion and amortization of the three months ended of $30,182 in 2023 and $49,027 in 2022 and for the nine months ended $164,890 in 2022 and $182,931 in 2023)

 

1,021,619

 

1,405,395

 

3,262,889

 

5,499,491

Loss from operations

 

(983,668)

 

(1,512,271)

 

(3,205,807)

 

(5,705,931)

Gain (loss) on sale of assets

8,191,610

(5,909)

Other Income (expense)

30,000

Interest income (expense), net

 

(483,271)

 

(279,365)

 

(1,052,318)

 

(696,817)

Loss before income tax provision

 

(1,466,939)

 

(1,791,636)

 

3,963,485

 

(6,408,657)

Income tax expense

 

 

 

 

Net Income (Loss)

$

(1,466,939)

$

(1,791,636)

$

3,963,485

$

(6,408,657)

Earnings (loss) per shares - basic and diluted

$

(0.24)

$

(0.29)

$

0.48

$

(1.02)

Weighted average shares outstanding - basic and diluted

6,763,125

6,656,125

7,387,157

6,655,598

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

ROCKY MOUNTAIN INDUSTRIALS, INC.

Statements of Changes in Stockholder Equity (Unaudited)

Preferred Stock

Common Stock Class A

Common Stock Class B

Series A-1

Series A-2

Series A-3

Additional

Accumulated

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Paid-In Capital

    

Deficit

    

Total

Balance, March 31, 2022

35,785,858

$

35,786

4,866,832

$

4,868

48.27

$

4,827,000

19.45

$

1,950,000

50.75

$

5,075,140

$

58,972,469

$

(63,810,756)

$

7,054,507

Issuance of restricted Class B Common stock for compensation

5,000

5

(5)

Forfeiture of Class B Common stock

(5,000)

(5)

5

Quarterly dividends on Series A-1 and A-2 Preferred shares

(135,170)

(135,170)

Stock-based compensation

656,876

656,876

Net loss

(2,698,775)

(2,698,775)

Balance, June 30, 2022

35,785,858

35,786

4,866,832

4,868

48.27

4,827,000

19.45

1,950,000

50.75

5,075,140

59,629,345

(66,644,701)

4,877,438

Quarterly dividends on A-1 and A-2 Preferred shares

(136,654)

(136,654)

Stock-based compensation

655,105

655,105

Net loss

(1,918,246)

(1,918,246)

Balance, September 30, 2022

35,785,858

35,786

4,866,832

4,868

48.27

4,827,000

19.45

1,950,000

50.75

5,075,140

60,284,450

(68,699,601)

3,477,643

Quarterly dividends on A-1 and A-2 Preferred shares

(136,654)

(136,654)

Stock-based compensation

335,939

335,939

Net Loss

(1,791,636)

(1,791,636)

Balance, December 31, 2022

35,785,858

$

35,786

4,866,832

$

4,868

48.27

$

4,827,000

19.45

$

1,950,000

50.75

$

5,075,140

$

60,620,389

$

(70,627,891)

$

1,885,292

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

ROCKY MOUNTAIN INDUSTRIALS, INC.

Statements of Changes in Stockholder Equity (Unaudited)(Continued)

Preferred Stock

Common Stock Class A

Common Stock Class B

Series A-1

Series A-2

Series A-3

Additional

Accumulated

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Paid-In Capital

    

Deficit

    

Total

Balance, March 31, 2023

35,785,858

$

35,786

4,973,832

$

4,975

48.27

$

4,827,000

19.45

$

1,950,000

50.75

$

5,075,140

$

60,783,824

$

(72,702,666)

$

(25,941)

Quarterly dividends on Series A-1 and A-2 Preferred shares

(135,168)

(135,168)

Stock-based compensation

92,707

92,707

Net loss

(1,526,184)

(1,526,184)

Balance, June 30, 2023

35,785,858

35,786

4,973,832

4,975

48.27

4,827,000

19.45

1,950,000

50.75

5,075,140

60,876,531

(74,364,018)

(1,594,586)

Issuance of restricted Class B Common stock for compensation

914,150

914,150

Quarterly dividends on Series A-1 and A-2 Preferred shares

(136,654)

(136,654)

Stock-based compensation

49,478

49,478

Net Income

6,956,608

6,956,608

Balance, September 30, 2023

35,785,858

35,786

4,973,832

4,975

48.27

4,827,000

19.45

1,950,000

50.75

5,075,140

61,840,159

(67,544,064)

6,188,996

Quarterly dividends on Series A-1 and A-2 Preferred shares

(136,654)

(136,654)

Stock-based compensation

31,250

31,250

Net loss

(1,466,939)

(1,466,939)

Balance, December 31, 2023

35,785,858

$

35,786

4,973,832

$

4,975

48.27

$

4,827,000

19.45

$

1,950,000

50.75

$

5,075,140

$

61,871,409

$

(69,147,657)

$

4,616,653

The accompanying notes are an integral part of these condensed consolidated financial statements.

8

ROCKY MOUNTAIN INDUSTRIALS, INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

Nine months ended

December 31, 

    

2023

    

2022

Cash flow from operating activities:

 

  

 

  

Net income (loss)

$

3,963,485

$

(6,408,657)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation, depletion and amortization expense

 

182,931

 

164,890

Stock-based compensation

 

1,087,585

 

1,647,920

Gain/loss on sale of assets

(8,191,610)

5,909

Amortization of debt discount and deferred financing cost

 

299,193

 

314,006

Accretion expense

10,589

9,626

Changes in operating assets and liabilities:

 

 

Accounts receivable

 

5,288

 

47,726

Other receivables

1,787,546

304,813

Inventory

 

26,411

 

(79,424)

Prepaid expenses

 

(1,631,583)

 

(912,472)

Restricted cash

 

 

(16)

Deposits and other assets

86,038

Accounts payable

 

(3,835,864)

 

4,191,119

Accrued liabilities

 

32,011

 

30,302

Accrued liabilities, related parties

 

325,000

 

360,000

Lease Liability

(7,808)

60,994

Other

1

(2)

Net cash provided by (used in) operating activities

 

(5,946,825)

 

(177,228)

Cash Flows from Investing Activities:

Proceeds from sale of assets

10,451,411

Investment in land under development

(25,462,887)

(17,478,549)

Reimbursement of land under development cost from Metro District

14,004,822

13,469,317

Purchase of property, plant and equipment

(2,262)

Net cash provided by (used in) investing activities

 

(1,006,654)

 

(4,011,494)

Cash Flows from Financing Activities:

Proceeds from note payable

16,927,985

10,853,777

Repayment of debt

(10,387,745)

(5,195,889)

Deferred financing cost

(626,186)

Net cash provided by financing activities

 

6,540,240

 

5,031,702

Net increase (decrease) in cash

(413,239)

842,980

Cash at beginning of period

3,528,858

3,238,377

Cash at end of period

$

3,115,619

$

4,081,357

Restricted cash at beginning of period

$

185,530

$

185,514

Other

16

Restricted cash at end of period

$

185,530

$

185,530

Supplemental cash flow information:

Cash paid for interest

$

1,402,878

$

463,637

Cash paid for income taxes

$

$

Right of use asset / Lease liability

$

$

493,035

The accompanying notes are an integral part of these condensed consolidated financial statements.

9

ROCKY MOUNTAIN INDUSTRIALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION

On January 1, 2020, the Company changed its name from RMR Industrials, Inc. to Rocky Mountain Industrials, Inc.

Rocky Mountain Industrials, Inc. (the “Company”, “RMI”, “we”, “our”, “us”) seeks to acquire and consolidate complementary industrial assets. RMI’s consolidation strategy is to assemble a portfolio of mature and value-add industrial commodities businesses to generate scalable enterprises with a broad portfolio of products and services addressing a common and stable customer base.

Through our wholly owned subsidiary, RMR Aggregates, Inc. (“RMR Aggregates”), we operate the Mid-Continent Quarry in Garfield County, Colorado, producing chemical-grade calcium carbonate that currently services local and regional customers in a variety of end markets, including but not limited to mining, manufacturing, construction, and agriculture.

Through our wholly owned subsidiary, Rail Land Company, LLC (“Rail Land Company”), we are actively developing Rocky Mountain Rail Park (the “Rail Park”), a dedicated rail-served industrial business park serving the greater Denver market. The Company’s development of the Rail Park is intended to expand the customer base for our products by utilizing rail freight capabilities to reach customers in the greater Denver area and by expanding our business to include rail transportation solutions and services.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the accounting policies described in the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended March 31, 2023, (“2023 Form 10-K”) and should be read in conjunction with such consolidated financial statements and related notes. The 2023 year end consolidated balance sheet data included in the Form 10-Q filing was derived from the audited consolidated financial statements in our 2023 Form 10-K, but does not include all disclosures required by accounting principles generally accepted in the United States.  The following notes to these interim consolidated financial statements highlight significant changes to the notes included in the March 31, 2023 audited consolidated financial statements included in our 2023 Form 10-K and present interim disclosures as required by the Securities and Exchange Commission.

Consolidation

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The condensed consolidated financial statements include the financial condition and results of operations of our wholly-owned subsidiaries, where intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that impact the reported amounts of assets, liabilities, and expenses, and disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and

10

whether historical trends are expected to be representative of future trends. The estimation process may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from those estimated amounts and assumptions used in the preparation of the financial statements.

Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

- Level 1: Quoted market prices in active markets for identical assets or liabilities

- Level 2: Observable market-based inputs or inputs that are corroborated by market data

- Level 3: Unobservable inputs that are not corroborated by market data

The fair value of notes payable was $20,871,986 and $14,000,947 as of December 31, 2023 and March 31, 2023, respectively.

Earnings (loss) per Common Share

Basic earnings (loss) per common share is calculated by dividing the net income (loss)  by the weighted average number of common shares outstanding during the period, without consideration for the potentially dilutive effects of converting stock options or restricted stock purchase rights outstanding.  Diluted earnings (loss) per common share is calculated by dividing net income (loss) by the weighted average of common shares outstanding during the period and the potential dilutive effects of stock options or restricted stock purchase rights outstanding during the period determined using the treasury stock method if the effect is not anti-dilutive.  In periods in which the Company reports a net loss, diluted earnings per share is the same as basic earnings per share since dilutive common shares are not assumed to have been issued, as their effect is anti-dilutive. Participating securities (primarily convertible preferred stock) of 624,032 equivalent common shares have been included in basic and diluted weighted average shares outstanding, for the nine months ended December 31, 2023.

3. INVENTORY

Inventory, is valued at the lower of cost (average) or net realizable value.

December 31, 

March 31, 

2023

2023

    

Blasted Rock

$

75,832

$

102,243

Total

$

75,832

$

102,243

11

4. PROPERTY, PLANT AND EQUIPMENT

The following summarizes the Company’s property, plant and equipment as of:

    

December 31, 

    

March 31, 

2023

2023

Recoverable Limestone

$

1,477,469

$

1,477,469

Mill Equipment

 

1,220,657

 

1,220,657

Mining Equipment

 

333,030

 

333,029

Mobile Equipment

 

569,212

 

863,660

Other

 

78,972

 

78,974

Total

 

3,679,340

 

3,973,789

Less: Accumulated Depreciation

 

(1,624,656)

 

(1,739,818)

Property, plant and equipment, net

$

2,054,684

$

2,233,971

5. NOTES PAYABLE

In May 2022, Rail Land Company executed on a Promissory Note for a construction loan (“Construction Note”) of $21M and a Promissory Note for a revolving line of credit (“Line of Credit”) of $2M with a bank to provide for the developer portion of infrastructure costs of the Rail Park. A portion of the $21M Construction Note was used to repay the Secured Promissory Note. The Construction Note is secured by the underlying property of the Rail Park and RMI is the guarantor. The Line of Credit is secured by amounts owed to Rail Land Company from the District for submitted pay applications. The Construction Note and Line of Credit incur interest at prime rate plus 2.25% and each had maturity dates of May 20, 2024. The initial interest rate was 6.25%.

On July 28, 2023, Rail Land Company executed an amendment to its $21M Construction Note. The amendment cancelled the $2M Line of Credit and increased the Construction Note to $29.5M and includes a reborrowing amount of up to $8.5M. The Construction Note incurs interest at prime rate plus 2.25% and has an amended maturity date of February 17, 2025.

Net proceeds from the sale of Rail Park lots shall be used to reduce the then outstanding principal balance of the Construction Note at a rate of eighty five percent (85%) of net proceeds of the first lot sale and ninety percent (90%) of net proceeds from subsequent lot sales. Distribution or dividends of Rail Land Company to any of its members or other legal beneficial owner may not be paid without the consent of the bank. Rail Land Company is to maintain a minimum cash balance with the bank of $1M, tested quarterly.

Effective

    

December 31, 2023

    

March 31, 2023

 

Interest Rate

Maturity Date

Equipment Loans

$

$

5,969

2.10% - 6.30%

August 25, 2021 - January 22, 2023

Construction Note

20,495,946

13,586,665

10.75%

February 17, 2025

Promissory notes

207,290

243,782

7.18%

January 1, 2025

Secured disaster loan (SBA)

168,750

164,531

3.75%

September 9, 2050

20,871,986

14,000,947

Unamortized debt issuance cost

(474,541)

(447,154)

20,397,445

13,553,793

Less: current portion

(49,000)

(40,969)

Debt due after one year

$

20,348,445

$

13,512,824

12

6. TRANSACTIONS WITH RELATED PARTIES

As of December 31, 2023, the Company has accrued $2,202,500 for unpaid officers’ compensation expense in accordance with consulting agreements with our Non-executive Board Chairman and Chief Executive Officer. Under the terms of each consulting agreement, each consultant shall serve as an executive officer to the Company and receive monthly compensation of $35,000. The consulting agreements may be terminated by either party for breach or upon thirty days prior written notice.