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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/13/24 Rocky Mountain Industrials, Inc. 10-Q 12/31/23 53:4.6M Toppan Merrill Bridge/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 1.20M
6: EX-95 Mine-Safety Disclosure HTML 104K
2: EX-31.1 Certification -- §302 - SOA'02 HTML 22K
3: EX-31.2 Certification -- §302 - SOA'02 HTML 22K
4: EX-32.1 Certification -- §906 - SOA'02 HTML 18K
5: EX-32.2 Certification -- §906 - SOA'02 HTML 18K
12: R1 Document And Entity Information HTML 74K
13: R2 Condensed Consolidated Balance Sheets (Unaudited) HTML 144K
14: R3 Condensed Consolidated Balance Sheets (Unaudited) HTML 46K
(Parenthetical)
15: R4 Condensed Consolidated Statements of Operations HTML 81K
(Unaudited)
16: R5 Condensed Consolidated Statements of Operations HTML 18K
(Unaudited) (Parenthetical)
17: R6 Statements of Changes in Stockholder Equity HTML 80K
(Unaudited)
18: R7 Condensed Consolidated Statements of Cash Flows HTML 111K
(Unaudited)
19: R8 Organization HTML 20K
20: R9 Summary of Significant Accounting Policies HTML 25K
21: R10 Inventory HTML 30K
22: R11 Property, Plant and Equipment HTML 39K
23: R12 Notes Payable HTML 66K
24: R13 Transactions With Related Parties HTML 22K
25: R14 Shareholders' Equity HTML 31K
26: R15 Share-Based Compensation HTML 21K
27: R16 Segment Reporting HTML 105K
28: R17 Commitments and Contingencies HTML 29K
29: R18 Summary of Significant Accounting Policies HTML 35K
(Policies)
30: R19 Inventory (Tables) HTML 31K
31: R20 Property, Plant and Equipment (Tables) HTML 38K
32: R21 Notes Payable (Tables) HTML 59K
33: R22 Segment Reporting (Tables) HTML 97K
34: R23 Commitments and Contingencies (Tables) HTML 23K
35: R24 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - HTML 20K
Additional Information (Details)
36: R25 Inventory (Details) HTML 19K
37: R26 Property, Plant and Equipment (Details) HTML 35K
38: R27 Notes Payable (Details) HTML 39K
39: R28 Notes Payable - Schedule of Notes Payable HTML 50K
(Details)
40: R29 Transactions With Related Parties (Details) HTML 26K
41: R30 Shareholders' Equity (Details) HTML 47K
42: R31 Share-Based Compensation (Details) HTML 38K
43: R32 SEGMENT REPORTING - Description (Details) HTML 50K
44: R33 SEGMENT REPORTING - Reportable Segments (Details) HTML 52K
45: R34 COMMITMENTS AND CONTINGENCIES - Additional HTML 34K
Information (Details)
46: R35 COMMITMENTS AND CONTINGENCIES - Schedule of HTML 22K
Reconciliation of Carrying Amount of Accrued
Reclamation Liabilities (Details)
47: R36 Pay vs Performance Disclosure HTML 29K
48: R37 Insider Trading Arrangements HTML 22K
50: XML IDEA XML File -- Filing Summary XML 86K
53: XML XBRL Instance -- rmri-20231231x10q_htm XML 1.03M
49: EXCEL IDEA Workbook of Financial Report Info XLSX 76K
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9: EX-101.DEF XBRL Definitions -- rmri-20231231_def XML 392K
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7: EX-101.SCH XBRL Schema -- rmri-20231231 XSD 98K
51: JSON XBRL Instance as JSON Data -- MetaLinks 353± 502K
52: ZIP XBRL Zipped Folder -- 0001558370-24-001080-xbrl Zip 212K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form i 10-Q
(Mark One)
i ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended i December 31, 2023
or
i ☐ 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: i 0-55402
i Rocky Mountain Industrials, Inc. (formerly RMR Industrials, Inc.)
(Exact name of registrant as specified in its charter)
i Nevada |
| i 46-0750094 |
(State or jurisdiction of incorporation or organization) | | (IRS Employer Identification No.) |
i 6200 South Syracuse Way, i Suite 450
i Greenwood Village, i CO i 80111
(Address of principal executive offices)
( i 720) i 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 ☐ i 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 ☐ i 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 ☐ |
i Non-accelerated filer ☒ | Smaller reporting company i ☒ |
Emerging growth company i ☒ |
|
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. i ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒
As of February 13, 2024, the registrant had i 35,785,858 shares of Class A Common Stock, i 4,973,832 shares of Class B Common Stock outstanding and i 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.
4
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
ROCKY MOUNTAIN INDUSTRIALS, INC.
Condensed Consolidated Balance Sheets (Unaudited)
| | | | | | | |
| | December 31, | | | |||
|
| 2023 |
| 2023 | | ||
ASSETS |
| |
|
| |
| |
Current assets |
| |
|
| |
| |
Cash | | $ | i 3,115,619 | | $ | i 3,528,858 | |
Accounts receivable | |
| i 48,316 | |
| i 53,604 | |
Other receivables | | | i 859,722 | | | i 2,647,268 | |
Inventory | |
| i 75,832 | |
| i 102,243 | |
Prepaid expenses | |
| i 2,883,227 | |
| i 1,251,644 | |
Total current assets | |
| i 6,982,716 | |
| i 7,583,617 | |
| | | | | | | |
Property, plant, and equipment, net | |
| i 2,054,684 | |
| i 2,233,971 | |
Land under development | |
| i 24,137,831 | |
| i 14,939,567 | |
Right of use asset | | | i 358,999 | | | i 417,734 | |
Asset retirement obligation, net | |
| i 62,620 | |
| i 66,264 | |
Other intangibles, net | |
| i 41,000 | |
| i 41,000 | |
Restricted cash | | | i 185,530 | | | i 185,530 | |
Deposits and other assets | |
| i 35,090 | |
| i 35,090 | |
Total assets | | $ | i 33,858,470 | | $ | i 25,502,773 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
|
| |
|
| |
Current liabilities | |
|
| |
|
| |
Accounts payable | | $ | i 3,740,616 | | $ | i 7,576,480 | |
Accrued liabilities | |
| i 175,414 | |
| i 147,621 | |
Accrued liabilities, related party | |
| i 2,202,500 | |
| i 1,877,500 | |
Dividends payable | | | i 2,151,345 | | | i 1,742,869 | |
Debt due within one year | | | i 49,000 | | | i 40,969 | |
Lease liability, current | | | i 90,100 | | | i 78,960 | |
Total current liabilities | |
| i 8,408,975 | |
| i 11,464,399 | |
| | | | | | | |
Debt due after one year | | | i 20,348,445 | | | i 13,512,824 | |
Lease liability, long-term | | | i 329,101 | | | i 406,784 | |
Accrued reclamation liability | |
| i 155,296 | |
| i 144,707 | |
Total liabilities | |
| i 29,241,817 | |
| i 25,528,714 | |
| | | | | | | |
Commitments and Contingencies | | | | | | | |
| | | | | | | |
Stockholders’ Equity (Deficit) | |
|
| |
|
| |
Preferred Stock Series A-1, $ i i 0.001 / par value, i i 50,000,000 / shares authorized: i i 48.27 / shares issued and outstanding on December 31, 2023 and March 31, 2023 | |
| i 4,827,000 | |
| i 4,827,000 | |
Preferred Stock Series A-2, $ i i 0.001 / par value, i i 50,000,000 / shares authorized: i i 19.45 / issued and outstanding on December 31, 2023 and March 31, 2023 | | | i 1,950,000 | | | i 1,950,000 | |
Preferred Stock Series A-3, $ i i 0.001 / par value, i i 50,000,000 / shares authorized: i i 50.75 / issued and outstanding on December 31, 2023 and March 31, 2023 | | | i 5,075,140 | | | i 5,075,140 | |
Class A Common Stock, $ i i 0.001 / par value; i i 2,000,000,000 / shares authorized; i i 35,785,858 / shares issued and outstanding on December 31, 2023 and March 31, 2023 | |
| i 35,786 | |
| i 35,786 | |
Class B Common Stock, $ i i 0.001 / par value; i i 100,000,000 / shares authorized; i i 4,973,832 / shares issued and outstanding on December 31, 2023 and March 31, 2023 | |
| i 4,975 | | | i 4,975 | |
Additional paid-in capital | |
| i 61,871,409 | |
| i 60,783,824 | |
Accumulated deficit | |
| ( i 69,147,657) | |
| ( i 72,702,666) | |
Total stockholders’ equity (deficit) | | | i 4,616,653 | | | ( i 25,941) | |
Total liabilities and stockholders’ equity (deficit) | | $ | i 33,858,470 | | $ | i 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, | | | |||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | | ||||
| | | | | | | | | | | | | |
Revenue | | $ | i 116,713 | | $ | i 243,303 | | $ | i 453,085 | | $ | i 714,884 | |
Cost of goods sold | |
| i 78,762 | |
| i 350,179 | |
| i 396,003 | |
| i 921,324 | |
Gross profit (loss) | |
| i 37,951 | |
| ( i 106,876) | |
| i 57,082 | |
| ( i 206,440) | |
Selling, general and administrative (includes depreciation, depletion and amortization of the three months ended of $ i 30,182 in 2023 and $ i 49,027 in 2022 and for the nine months ended $ i 164,890 in 2022 and $ i 182,931 in 2023) | |
| i 1,021,619 | |
| i 1,405,395 | |
| i 3,262,889 | |
| i 5,499,491 | |
Loss from operations | |
| ( i 983,668) | |
| ( i 1,512,271) | |
| ( i 3,205,807) | |
| ( i 5,705,931) | |
Gain (loss) on sale of assets | | | — | | | — | | | i 8,191,610 | | | ( i 5,909) | |
Other Income (expense) | | | — | | | — | | | i 30,000 | | | — | |
Interest income (expense), net | |
| ( i 483,271) | |
| ( i 279,365) | |
| ( i 1,052,318) | |
| ( i 696,817) | |
Loss before income tax provision | |
| ( i 1,466,939) | |
| ( i 1,791,636) | |
| i 3,963,485 | |
| ( i 6,408,657) | |
Income tax expense | |
| — | |
| — | |
| — | |
| — | |
Net Income (Loss) | | $ | ( i 1,466,939) | | $ | ( i 1,791,636) | | $ | i 3,963,485 | | $ | ( i 6,408,657) | |
| | | | | | | | | | | | | |
Earnings (loss) per shares - basic and diluted | | $ | ( i 0.24) | | $ | ( i 0.29) | | $ | i 0.48 | | $ | ( i 1.02) | |
| | | | | | | | | | | | | |
Weighted average shares outstanding - basic and diluted | | | i 6,763,125 | | | i 6,656,125 | | | i 7,387,157 | | | i 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 | | i 35,785,858 | | $ | i 35,786 | | i 4,866,832 | | $ | i 4,868 | | i 48.27 | | $ | i 4,827,000 | | i 19.45 | | $ | i 1,950,000 | | i 50.75 | | $ | i 5,075,140 | | $ | i 58,972,469 | | $ | ( i 63,810,756) | | $ | i 7,054,507 |
Issuance of restricted Class B Common stock for compensation | | — | | | — | | i 5,000 | | | i 5 | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 5) | | | — |
Forfeiture of Class B Common stock | | — | | | — | | ( i 5,000) | | | ( i 5) | | — | | | — | | — | | | — | | — | | | — | | | — | | | i 5 | | | — |
Quarterly dividends on Series A-1 and A-2 Preferred shares | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 135,170) | | | ( i 135,170) |
Stock-based compensation | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | i 656,876 | | | — | | | i 656,876 |
Net loss | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 2,698,775) | | | ( i 2,698,775) |
Balance, June 30, 2022 | | i 35,785,858 | | | i 35,786 | | i 4,866,832 | | | i 4,868 | | i 48.27 | | | i 4,827,000 | | i 19.45 | | | i 1,950,000 | | i 50.75 | | | i 5,075,140 | | | i 59,629,345 | | | ( i 66,644,701) | | | i 4,877,438 |
Quarterly dividends on A-1 and A-2 Preferred shares | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 136,654) | | | ( i 136,654) |
Stock-based compensation | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | i 655,105 | | | — | | | i 655,105 |
Net loss | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 1,918,246) | | | ( i 1,918,246) |
Balance, September 30, 2022 | | i 35,785,858 | | | i 35,786 | | i 4,866,832 | | | i 4,868 | | i 48.27 | | | i 4,827,000 | | i 19.45 | | | i 1,950,000 | | i 50.75 | | | i 5,075,140 | | | i 60,284,450 | | | ( i 68,699,601) | | | i 3,477,643 |
Quarterly dividends on A-1 and A-2 Preferred shares | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 136,654) | | | ( i 136,654) |
Stock-based compensation | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | i 335,939 | | | — | | | i 335,939 |
Net Loss | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 1,791,636) | | | ( i 1,791,636) |
Balance, December 31, 2022 | | i 35,785,858 | | $ | i 35,786 | | i 4,866,832 | | $ | i 4,868 | | i 48.27 | | $ | i 4,827,000 | | i 19.45 | | $ | i 1,950,000 | | i 50.75 | | $ | i 5,075,140 | | $ | i 60,620,389 | | $ | ( i 70,627,891) | | $ | i 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 | | i 35,785,858 | | $ | i 35,786 | | i 4,973,832 | | $ | i 4,975 | | i 48.27 | | $ | i 4,827,000 | | i 19.45 | | $ | i 1,950,000 | | i 50.75 | | $ | i 5,075,140 | | $ | i 60,783,824 | | $ | ( i 72,702,666) | | $ | ( i 25,941) |
Quarterly dividends on Series A-1 and A-2 Preferred shares | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 135,168) | | | ( i 135,168) |
Stock-based compensation | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | i 92,707 | | | — | | | i 92,707 |
Net loss | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 1,526,184) | | | ( i 1,526,184) |
Balance, June 30, 2023 | | i 35,785,858 | | | i 35,786 | | i 4,973,832 | | | i 4,975 | | i 48.27 | | | i 4,827,000 | | i 19.45 | | | i 1,950,000 | | i 50.75 | | | i 5,075,140 | | | i 60,876,531 | | | ( i 74,364,018) | | | ( i 1,594,586) |
Issuance of restricted Class B Common stock for compensation | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | i 914,150 | | | — | | | i 914,150 |
Quarterly dividends on Series A-1 and A-2 Preferred shares | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 136,654) | | | ( i 136,654) |
Stock-based compensation | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | i 49,478 | | | — | | | i 49,478 |
Net Income | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | i 6,956,608 | | | i 6,956,608 |
Balance, September 30, 2023 | | i 35,785,858 | | | i 35,786 | | i 4,973,832 | | | i 4,975 | | i 48.27 | | | i 4,827,000 | | i 19.45 | | | i 1,950,000 | | i 50.75 | | | i 5,075,140 | | | i 61,840,159 | | | ( i 67,544,064) | | | i 6,188,996 |
Quarterly dividends on Series A-1 and A-2 Preferred shares | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 136,654) | | | ( i 136,654) |
Stock-based compensation | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | i 31,250 | | | — | | | i 31,250 |
Net loss | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | ( i 1,466,939) | | | ( i 1,466,939) |
Balance, December 31, 2023 | | i 35,785,858 | | $ | i 35,786 | | i 4,973,832 | | $ | i 4,975 | | i 48.27 | | $ | i 4,827,000 | | i 19.45 | | $ | i 1,950,000 | | i 50.75 | | $ | i 5,075,140 | | $ | i 61,871,409 | | $ | ( i 69,147,657) | | $ | i 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 | | ||||
| | | |||||
|
| 2023 |
| 2022 | | ||
Cash flow from operating activities: |
| |
|
| |
| |
Net income (loss) | | $ | i 3,963,485 | | $ | ( i 6,408,657) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| | |
Depreciation, depletion and amortization expense | |
| i 182,931 | |
| i 164,890 | |
Stock-based compensation | |
| i 1,087,585 | |
| i 1,647,920 | |
Gain/loss on sale of assets | | | ( i 8,191,610) | | | i 5,909 | |
Amortization of debt discount and deferred financing cost | |
| i 299,193 | |
| i 314,006 | |
Accretion expense | | | i 10,589 | | | i 9,626 | |
Changes in operating assets and liabilities: | |
| | |
| | |
Accounts receivable | |
| i 5,288 | |
| i 47,726 | |
Other receivables | | | i 1,787,546 | | | i 304,813 | |
Inventory | |
| i 26,411 | |
| ( i 79,424) | |
Prepaid expenses | |
| ( i 1,631,583) | |
| ( i 912,472) | |
Restricted cash | |
| — | |
| ( i 16) | |
Deposits and other assets | | | — | | | i 86,038 | |
Accounts payable | |
| ( i 3,835,864) | |
| i 4,191,119 | |
Accrued liabilities | |
| i 32,011 | |
| i 30,302 | |
Accrued liabilities, related parties | |
| i 325,000 | |
| i 360,000 | |
Lease Liability | | | ( i 7,808) | | | i 60,994 | |
Other | | | i 1 | | | ( i 2) | |
Net cash provided by (used in) operating activities | |
| ( i 5,946,825) | |
| ( i 177,228) | |
| | | | | | | |
Cash Flows from Investing Activities: | | | | | | | |
Proceeds from sale of assets | | | i 10,451,411 | | | — | |
Investment in land under development | | | ( i 25,462,887) | | | ( i 17,478,549) | |
Reimbursement of land under development cost from Metro District | | | i 14,004,822 | | | i 13,469,317 | |
Purchase of property, plant and equipment | | | — | | | ( i 2,262) | |
Net cash provided by (used in) investing activities | |
| ( i 1,006,654) | |
| ( i 4,011,494) | |
| | | | | | | |
Cash Flows from Financing Activities: | | | | | | | |
Proceeds from note payable | | | i 16,927,985 | | | i 10,853,777 | |
Repayment of debt | | | ( i 10,387,745) | | | ( i 5,195,889) | |
Deferred financing cost | | | — | | | ( i 626,186) | |
Net cash provided by financing activities | |
| i 6,540,240 | |
| i 5,031,702 | |
| | | | | | | |
Net increase (decrease) in cash | | | ( i 413,239) | | | i 842,980 | |
Cash at beginning of period | | | i 3,528,858 | | | i 3,238,377 | |
Cash at end of period | | $ | i 3,115,619 | | $ | i 4,081,357 | |
| | | | | | | |
Restricted cash at beginning of period | | $ | i 185,530 | | $ | i 185,514 | |
Other | | | — | | | i 16 | |
Restricted cash at end of period | | $ | i 185,530 | | $ | i 185,530 | |
| | | | | | | |
Supplemental cash flow information: | | | | | | | |
Cash paid for interest | | $ | i 1,402,878 | | $ | i 463,637 | |
Cash paid for income taxes | | $ | — | | $ | — | |
Right of use asset / Lease liability | | $ | — | | $ | i 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
i1. 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.
i2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
iBasis 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.
iConsolidation
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.
iUse 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
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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.
iFair 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 $ i 20,871,986 and $ i 14,000,947 as of December 31, 2023 and March 31, 2023, respectively.
/ iEarnings (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 i 624,032 equivalent common shares have been included in basic and diluted weighted average shares outstanding, for the nine months ended December 31, 2023.
/
i3. INVENTORY
Inventory, is valued at the lower of cost (average) or net realizable value.
i
| | | | | | | |
| | December 31, | | | |||
| | 2023 | | 2023 |
| ||
| | | | | | | |
Blasted Rock | | $ | i 75,832 | | $ | i 102,243 | |
Total | | $ | i 75,832 | | $ | i 102,243 | |
/ /
11
4. PROPERTY, PLANT AND EQUIPMENT
The following summarizes the Company’s property, plant and equipment as of:
i
| | | | | | | |
|
| December 31, |
| | |||
| | 2023 | | 2023 | | ||
Recoverable Limestone | | $ | i 1,477,469 | | $ | i 1,477,469 | |
Mill Equipment | |
| i 1,220,657 | |
| i 1,220,657 | |
Mining Equipment | |
| i 333,030 | |
| i 333,029 | |
Mobile Equipment | |
| i 569,212 | |
| i 863,660 | |
Other | |
| i 78,972 | |
| i 78,974 | |
Total | |
| i 3,679,340 | |
| i 3,973,789 | |
Less: Accumulated Depreciation | |
| ( i 1,624,656) | |
| ( i 1,739,818) | |
Property, plant and equipment, net | | $ | i 2,054,684 | | $ | i 2,233,971 | |
/ /
i5. NOTES PAYABLE
In May 2022, Rail Land Company executed on a Promissory Note for a construction loan (“Construction Note”) of $ i 21M and a Promissory Note for a revolving line of credit (“Line of Credit”) of $ i 2M with a bank to provide for the developer portion of infrastructure costs of the Rail Park. A portion of the $ i 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 i 2.25% and each had maturity dates of May 20, 2024. The initial interest rate was i 6.25%.
On July 28, 2023, Rail Land Company executed an amendment to its $ i 21M Construction Note. The amendment cancelled the $ i 2M Line of Credit and increased the Construction Note to $ i 29.5M and includes a reborrowing amount of up to $ i 8.5M. The Construction Note incurs interest at prime rate plus i 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 ( i 85%) of net proceeds of the first lot sale and ninety percent ( i 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 $ i 1M, tested quarterly.
i
| | | | | | | | | | | | |
| | | | | | | | | Effective | | | |
|
|
| |
| Interest Rate | | | Maturity Date | ||||
Equipment Loans | | $ | — | | $ | i 5,969 | | | i i 2.10 / % - i i 6.30 / % | | | |
Construction Note | | | i 20,495,946 | | | i 13,586,665 | | | i i 10.75 / % | | | |
Promissory notes | | | i 207,290 | | | i 243,782 | | | i i 7.18 / % | | | |
Secured disaster loan (SBA) | | | i 168,750 | | | i 164,531 | | | i i 3.75 / % | | | September 9, 2050 |
| | | i 20,871,986 | | | i 14,000,947 | | | | | | |
Unamortized debt issuance cost | | | ( i 474,541) | | | ( i 447,154) | | | | | | |
| | | i 20,397,445 | | | i 13,553,793 | | | | | | |
Less: current portion | | | ( i 49,000) | | | ( i 40,969) | | | | | | |
Debt due after one year | | $ | i 20,348,445 | | $ | i 13,512,824 | | | | | | |
/ /
12
6. TRANSACTIONS WITH RELATED PARTIES
As of December 31, 2023, the Company has accrued $ i 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 $ i 35,000. The consulting agreements may be terminated by either party for breach or upon i thirty days prior written notice.
/
i7. SHAREHOLDERS’ EQUITY
Preferred Stock
The Company has authorized i 50,000,000 shares of preferred stock for issuance. In April 2021, the Board of Directors of the Company authorized i 118.47 shares as Series A Preferred Stock and designated i 48.27 shares as Series A-1 Convertible Preferred Stock, i 19.45 shares as Series A-2 Convertible Preferred Stock and i 50.75 shares as Series A-3 Convertible Preferred Stock (collectively referred to as “Series A Preferred Stock”). The Series A Preferred Stock is senior, with respect to dividend rights and to rights upon any voluntary or involuntary liquidation, dissolution or winding up of the Company (each, a “Liquidation Event”) in preference and priority to the Class A Common Stock and Class B Common Stock of the Company.
Voting Rights
Series A Preferred Stock is entitled to vote on all matters submitted to a vote of the stockholders of the Company together with the holders of Class B Common Stock and is entitled to that number of votes equal to the number of shares of Class B Common Stock into which the holder’s shares of Series A Preferred Stock could then be converted.
Dividends
Series A-1 Preferred Stock and Series A-2 Preferred Stock, accrue dividends at the rate per annum of $ i 8,000 (“Accruing Dividends”), subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock, whether or not declared, and shall be cumulative. The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company (other than dividends on shares of Class B Common Stock payable in shares of Class B Common Stock) unless the holders of the Series A-1 Preferred Stock and Series A-2 Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A-1 Preferred Stock and Series A- 2 Preferred Stock in an amount at least equal to the sum of (i) the amount of the aggregate Accruing Dividends then accrued on such share of Series A-1 Preferred Stock or Series A-2 Preferred Stock (as applicable) and not previously paid and (ii) in the case of a dividend on Class B Common Stock or any class or series that is convertible into Class B Common Stock, that dividend per share of Series A-1 Preferred Stock or Series A-2 Preferred Stock (as applicable) as would equal the product of (l) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Class B Common Stock and (2) the number of shares of Class B Common Stock issuable upon conversion of a share of Series A-I Preferred Stock or Series A-2 Preferred Stock (as applicable), in each case calculated on the record date for determination of holders entitled to receive such dividend. Series A-3 Preferred Stock does not accrue dividends.
Liquidation Preference
In the event of any Liquidation Event, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, and in the event of a Deemed Liquidation Event (as defined below), the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the available proceeds, as applicable, before any payment shall be made to the holders of Common Stock. A Deemed Liquidation Event is defined as a merger or consolidation in which a change of control of the Company has occurred or the sale, lease,
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transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole.
Conversion
Series A Preferred Stock is convertible, at the option of the holder, into a number of shares of Class B Common Stock determined by dividing (i) the sum of the Series A Original Issue Price and all then-unpaid Accruing Dividends by (ii) the respective conversion price in effect at the time of conversion. The Series A-1 Preferred Stock conversion price is $ i 25.00 per share, the Series A-2 Preferred Stock conversion price is $ i 21.00 per share and the Series A-3 Preferred Stock conversion price is $ i 15.00 per share.
In the event of an underwritten public offering, public uplist, or qualified equity issuance of at least $ i 10,000,000 in gross proceeds and a minimum price per share of $ i 25.00 for the Company's Common Stock (“Qualified Offering”), Series A Preferred Stock shall automatically be converted into such number of fully paid and non-assessable shares of Class B Common Stock at the then effective conversion rate as noted above.
Common Stock
The Company has authorized i 2,100,000,000 shares of common stock for issuance, including i i 2,000,000,000 / shares of Class A Common Stock and i i 100,000,000 / shares of Class B Common Stock.
The holders of Class A Common Stock have the right to vote on all matters on which stockholders have the right to vote. The holders of Class B Common Stock have the right to vote solely on matters where the vote of such holders is explicitly required under Nevada law. The holders of Class A Common Stock and Class B Common stock have equal distribution rights, provided that distributions in securities shall be made in either identical securities or securities with similar voting characteristics. The holders of Class A Common Stock and Class B Common Stock are entitled to receive identical per-share consideration upon a merger, conversion or exchange of the Company with another entity, and have equal rights upon a dissolution, liquidation or winding-up of the Company.
i8. SHARE-BASED COMPENSATION
The RMR Industrials, Inc. 2015 Equity Incentive Plan (the “2015 Plan”) authorizes the issuance of up to i 30% of the outstanding shares of Common Stock at any time pursuant to awards made by the Company’s board of directors. As of December 31, 2023, there were i 808,786 shares still available for future issuance under the 2015 Plan.
Stock Options
The Company grants stock options to certain employees that give them the right to acquire our Class B common stock under the 2015 Plan. The exercise price of options granted is equal to the closing price per share of our stock at the date of grant. The nonqualified options vest at a rate of i 33% on each of the first three anniversaries of the grant date provided that the award recipient continues to be employed by us through each of those vesting dates and expire i ten years from the date of grant. i No stock option awards were granted during the nine months ended December 31, 2023.
Stock Awards
During the nine months ended December 31, 2023, the Company granted i no restricted shares of Class B Common Stock. Restricted shares vest ratably over a i four-year vesting period, subject to continued service and a performance condition. During the nine months ended December 31, 2023, i no restricted shares of common stock were forfeited.
/
i9. SEGMENT REPORTING
For the three and nine months ended December 31, 2023 and 2022, the Company has i i i i two / / / reportable segments: Aggregates and Rail Park. The Aggregates segment produces chemical grade limestone for use in the aggregates market. The Rail
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Park segment consists of land under development to provide a rail terminal and services facility and currently has no operational activity. The Rail Park will require significant future capital investment before the segment starts generating recurring revenue. The Rail Park development commenced in the first half of calendar year 2021.
The Aggregates segment had i one construction company, Customer A that accounted for i 78% of segment revenue for the three months ended December 31, 2023 and had i two construction companies, Customer A that accounted for approximately i 61% of segment revenue and Customer B that accounted for i 18% of segment revenue for the nine months ended December 31, 2023.
As of December 31, 2023, the construction company, Customer A, accounted for approximately i 39% and Customer C accounted for approximately i 13% of Aggregates segment accounts receivable balance.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on profit or loss from operations before income taxes not including nonrecurring gains and losses.
The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. All assets are held and all operating activities occur within the United States.
i
| | | | | | | | | | | | | | | | | | | |
| | | Three months ended December 31, 2023 | | | Three months ended December 31, 2022 | | ||||||||||||
|
|
| Aggregates |
| Rail Park |
| Other/ Corporate |
| Total | | | Aggregates |
| Rail Park |
| Other/ Corporate |
| Total | |
Revenue |
| $ | i 116,713 | $ | — | $ | — | $ | i 116,713 | | $ | i 243,303 | $ | — | $ | — | $ | i 243,303 | |
Gross profit (loss) |
|
| i 37,951 | | — | | — |
| i 37,951 | | | ( i 106,876) | | — | | — |
| ( i 106,876) | |
Selling, general and administrative |
|
| i 150,131 | | — | | i 871,488 |
| i 1,021,619 | | | i 144,945 | | — | | i 1,260,450 |
| i 1,405,395 | |
Property, plant and equipment, net |
|
| i 2,054,684 | | — | | — |
| i 2,054,684 | | | i 2,276,729 | | — | | i 12,177 |
| i 2,288,906 | |
Land under development |
|
| — | | i 24,137,831 | | — |
| i 24,137,831 | | | — | | i 10,982,866 | | — |
| i 10,982,866 | |
| | | | | | | | | | | | | | | | | | | |
| | | Nine months ended December 31, 2023 | | | Nine months ended December 31, 2022 | | ||||||||||||
| | | Aggregates |
| Rail Park |
| Other/ Corporate |
| Total | | | Aggregates |
| Rail Park |
| Other/ Corporate |
| Total | |
Revenue | | $ | i 453,085 | $ | — | $ | — | $ | i 453,085 | | $ | i 714,884 | $ | — | $ | — | $ | i 714,884 | |
Gross profit (loss) | | | i 57,082 | | — | | — |
| i 57,082 | | | ( i 206,440) | | — | | — |
| ( i 206,440) | |
Selling, general and administrative | | | i 513,302 | | — | | i 2,749,587 |
| i 3,262,889 | | | i 434,773 | | — | | i 5,064,718 |
| i 5,499,491 | |
Property, plant and equipment, net | | | i 2,054,684 | | — | | — |
| i 2,054,684 | | | i 2,276,729 | | — | | i 12,177 |
| i 2,288,906 | |
Land under development | | | — | | i 24,137,831 | | — |
| i 24,137,831 | | | — | | i 10,982,866 | | — |
| i 10,982,866 | |
Land Under Development
In 2018, the Company formed the Rocky Mountain Rail Park Metropolitan District (“District”) for the purpose of financing public improvements related to the development of approximately i 620 acres, including open space and other right-of-way areas and providing ongoing operations and maintenance services related to the public improvements. Public improvements are generally any part or all of the public improvements authorized to be planned, designed, acquired, constructed, installed, relocated, redeveloped, operated, maintained and/or financed, including necessary and appropriate landscaping, appurtenances and real property to effect such improvements, as generally described in the Colorado Special District Act (Title 32, Article 1, Colorado Revised Statutes) and as may be necessary to serve the future taxpayers and inhabitants of the District, as determined by the District Board, including public improvements within and outside of the District’s boundaries.
In April 2021, the District closed on its Limited Tax General Obligation and Water Revenue Bonds, Series 2021A and 2021B (“Tax - Exempt Bonds”) raising total proceeds of approximately $ i 65.2 million, approximately $ i 51.2 million of which will be directly used to fund the public improvements. The Tax - Exempt Bonds are an obligation of the District and not of the Company and will be repaid through ownership taxes and other enterprise revenues collected by the District from property owners residing in the District.
15
Gain on Sale of Assets
In August 2023, the Rail Park sold approximately i 60 acres of land under development for a total sales price of $ i 13.1 million and recognized a net gain of $ i 8.2 million.
i10. COMMITMENTS AND CONTINGENCIES
Accrued Reclamation Liability
The Company incurs reclamation liabilities as part of its mining activities. Quarry activities require the removal and relocation of significant levels of overburden to access materials of usable quantity and quality. The same overburden material is used to reclaim depleted mine areas, which must be sloped to a certain gradient and seeded to prevent erosion in the future. Reclamation methods and requirements can differ depending on the quarry and state rules and regulations in existence for certain locations. As of December 31, 2023, the Company’s undiscounted reclamation obligations totaled approximately $ i 366,000. This obligation is expected to be settled within the next i 20 years.
Reclamation costs resulting from the normal use of long-lived assets, either owned or leased, are recognized over the period the asset is in use. The obligation, which cannot be reduced by estimated offsetting cash flows, is recorded at fair value as a liability at the obligating event date and is accreted through charges to selling, general and administrative costs, inclusive of depreciation, depletion and amortization. The fair value is based on our estimate of the cost required for a third party to perform the legally required reclamation tasks including a reasonable profit margin. This fair value is also capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset.
The mining reclamation reserve is based on management’s estimate of future cost requirements to reclaim property at its operating quarry site. Costs are estimated in current dollars and inflated until the expected time of payment using a future estimated inflation rate and then discounted back to present value using a credit-adjusted, risk-free rate on obligations of similar maturity adjusted to reflect our credit rating. The Company will review reclamation liabilities at least every i three years for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation liabilities are reviewed in the period in which a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. Examples of events that would trigger a change in the cost include a new reclamation law or amendment to an existing mineral lease. Examples of events that would cause a change in the estimated settlement date include the acquisition of additional reserves or early or delayed closure of a site. Any affect to earnings from cost revisions is included in cost of revenue.
A reconciliation of the carrying amount of our accrued reclamation liabilities is as follows:
i
| | | |
Balance at April 1, 2023 |
| $ | i 144,707 |
Liabilities incurred | |
| i — |
Accretion expense | |
| i 10,589 |
Balance at December 31, 2023 | | $ | i 155,296 |
Reimbursement Agreement
In October 2023, Rail Land Company executed a Utility Installation Reimbursement Agreement (“Reimbursement Agreement”) with a natural gas utility provider (“Provider”). The effective date of the Reimbursement Agreement is stated to be the date of the infrastructure completion date anticipated to be within i 120 days from the execution of the Reimbursement Agreement. The Reimbursement Agreement provides that RLC will reimburse the Provider actual construction cost, up to, but not exceeding, approximately $ i 1.5M divided into i 5 increments of approximately $ i 0.3M. However, the reimbursement amount will be reduced if usage at the Rail Park exceeds certain thresholds beginning i 24 months after the effective date and annually thereafter until i 72 months after the effective date. The infrastructure construction has not commenced as of February 13, 2024.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion includes forward-looking statements for purposes of U.S. federal securities laws. See “Cautionary Note Regarding Forward-Looking Statements”.
Overview
We were incorporated in the State of Nevada in August 2012 under the name “Online Yearbook” with the principal business objective of developing and marketing online yearbooks for schools, companies and government agencies.
In November 2014, Rocky Mountain Resource Holdings, Inc. (“RMRH”) became our majority shareholder by acquiring 5,200,000 shares of our common stock (the “Shares”), or 69.06% of the then issued and outstanding shares, pursuant to stock purchase agreements with Messrs. El Maraana and Salah Blal, our former officers and directors. The Shares were acquired for an aggregate purchase price of $357,670.
In December 2014, we changed our name to “RMR Industrials, Inc.” and on January 1, 2020, the Company changed its name from RMR Industrials, Inc. to Rocky Mountain Industrials, Inc.
In July 2016, we formed RMR Aggregates, Inc., a Colorado corporation (“RMR Aggregates”), as our wholly-owned subsidiary. RMR Aggregates was formed to hold assets whose primary focus is the mining and processing of industrial minerals for the manufacturing, construction and agriculture sectors. These minerals include limestone, aggregates, marble, silica, barite and sand.
In October 2016, pursuant to an Asset Purchase Agreement with CalX Minerals, LLC, a Colorado limited liability company (“CalX”), RMR Aggregates completed the purchase of substantially all of the assets associated with the Mid-Continent Quarry on 41 BLM unpatented placer mining claims in Garfield County, Colorado. CalX assets include the mining claims, improvements, access rights, water rights, equipment, inventory, contracts, permits, certain intellectual property rights, and other tangible and intangible assets associated with the limestone mining operation.
In January 2018, the Company formed Rail Land Company, LLC (“Rail Land Company”) as a wholly-owned subsidiary to acquire and develop a rail terminal and services facility (the “Rail Park”). Rail Land Company purchased an approximately 470-acre parcel of real property located in Bennett, Colorado in February, 2018.
In July 2018 we exercised our option to acquire an additional approximately 150 acres for a total of approximately 620 acres. 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.
Results of Operations
Comparison of the three and nine months Ended December 31, 2023 and December 31, 2022
Revenues
Our revenues for the three-month and nine-month periods ended December 31, 2023 was $116,713 and $453,085. This compares to revenue for the same period ended December 31, 2022 of $243,303 and $714,884. The decrease in revenues for the three-month and nine-month period ended December 31, 2023, is the result of a decrease in demand from the Company’s primary customer.
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Cost of Goods Sold
Our cost of goods sold for the three-month and nine-month periods ended December 31, 2023 was $78,762 and $396,003. This compares to cost of goods sold for the same period ended December 31, 2022 of $350,179 and $921,324. The decrease in cost of goods sold for the three-month and nine-month period ended December 31, 2023 is generally the result of the decrease in revenues.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses for the three-month and nine-month periods ended December 31, 2023 were $1,021,619 and $3,262,889. This compares to operating expenses for the same period ended December 31, 2022 of $1,405,395 and $5,499,491. Selling, general and administrative expenses consisted of overhead costs related to payroll and associated benefits, consulting services from related parties, public company costs, and depreciation and amortization. The decrease is primarily related to the Company managing selling, general and administrative costs as we continue to operate in a development stage.
Interest Expense, net
Our interest expense, net for the three-month and nine-month periods ended December 31, 2023 were $483,271 and $1,052,318, compared to $279,365 and $696,817 of interest expense for the same periods ended December 31, 2022.
Net Income/(Loss)
Our net loss for the three-month period was $1,466,939 and net income of $3,963,485 for the nine month period ended December 31, 2023. This compares to a net loss for the same periods ended December 31, 2022 of $1,791,636 and $6,408,657.
Liquidity and Capital Resources
As of December 31, 2023, we had current assets of $6,982,716, total current liabilities of $8,408,975 and working capital deficiency of $1,426,259. We have incurred an accumulated loss of $69,147,657 since inception.
In past years, the Company funded operations by using cash proceeds received through the issuance of common and preferred stock and proceeds from debt financing. However, several significant transactions have occurred that have positively impacted the net financial position of the Company and strengthened its financial position and its ability to meet future obligation over the next 12 months without a need to raise additional funds as it has traditionally been required to do. These include:
| 1. | Rail Park FDP and Final Plat were unanimously approved by the Adams County Board of County Commissioners on September 1, 2020, paving the way for lot sales and construction. |
| 2. | On January 14, 2021, the Company sold an 83-acre lot to a Fortune 500 company for a gross sales price of $9.1M. This purchase was the first of twelve available lots in the Rail Park. Lot sales will be a primary source of cash inflows for the Company with significant interest from many potential light and heavy industrial tenants. |
| 3. | The RMRP Metro District bond offering closed on April 15, 2021, raising total proceeds of approximately $65.2M. These bond proceeds will fund the public infrastructure costs of the Rail Park. Total Rail Park project cost have been budgeted at between $60M and $75M of which approximately 75% is considered public infrastructure and therefore not an obligation of the Company. The Company is responsible for the remaining approximately 25%. |
| 4. | Construction on the south parcels of the Rail Park (approximately 150 acres) began in April 2021. The Company has in place a construction loan facility of $12M to fund its portion of construction costs (i.e., those not funded with Metro District bond proceeds). |
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| 5. | To date the Company has received approximately $2M as reimbursement of “pre-construction” costs that were incurred prior to the closing of the bond offering in April. |
| 6. | In September 2021, the Company sold its water rights underlying the Rail Park, to the Metro District for approximately $5.9M. |
| 7. | In May 2022, the Company closed on a construction loan facility of $21M and a working capital facility of $2M to provide for its developer portion of the infrastructure costs of the Rail Park. |
| 8. | In July 2023, the Company amended its construction loan facility to increase it from $21M to $29.5M. |
| 9. | In August 2023, the Company sold approximately 60 acres of land under development for $13.1M. |
Recently Issued Accounting Pronouncements
We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Required
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to the material weakness described below.
In light of the material weakness described below, we performed additional analysis and other post-closing procedures to ensure that our condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the condensed consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
Material Weakness and Related Remediation Initiatives
Our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2023, there was a material weakness in our internal control over financial reporting in that, due to budget constraints, the Company’s accounting department does not have sufficient accounting personnel (either in-house or external) necessary to ensure that complete and effective financial reporting controls are designed and implemented.
Remediation of Internal Control Deficiencies and Expenditures
We are developing a plan to address this material weakness, which includes hiring qualified accounting personnel and establishing a formal audit committee. We are uncertain at this time of the costs necessary to remediate the material weakness. Once implemented, remedial controls will have to be in place for at least several quarters before management is able to conclude that the material weakness has been remediated. We intend to continue to evaluate and strengthen our
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internal control over financial reporting systems. These efforts require significant time and resources. If we are unable to establish adequate internal control over financial reporting systems, we may encounter difficulties in the audit or review of our financial statements by our independent registered public accounting firm, which in turn may have a material adverse effect on our ability to prepare financial statements in accordance with GAAP and to comply with our SEC reporting obligations.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act, during the fiscal quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Not required.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the nine months ended December 31, 2023, there were no sales of unregistered equity securities.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Information regarding mine safety violations is included in Exhibit 95 to this quarterly report.
Item 5. Other Information
i N i o i n i e.
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Item 6. Exhibits
Exhibit Number |
| Exhibit |
| | |
10.10 | | |
31.1 * | | |
31.2 * | | |
32.1 * | | |
32.2 * | | |
95* | | |
101.INS | | Inline XBRL Instance Document |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
| | |
* |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ROCKY MOUNTAIN INDUSTRIALS, INC. | ||
| | |
Date: February 13, 2024 | By: | /s/ Brian Fallin |
Chief Executive Officer | ||
(Principal Executive Officer) | ||
| | |
Date: February 13, 2024 | By: | /s/ Brian H. Aratani |
| Chief Financial Officer | |
(Principal Financial Officer and Principal Accounting Officer) | ||
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| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 2/17/25 | ||||
| 1/1/25 | ||||
| 5/20/24 | ||||
| Filed on: | 2/13/24 | |||
| For Period end: | 12/31/23 | |||
| 9/30/23 | 10-Q | |||
| 7/28/23 | ||||
| 6/30/23 | 10-Q | |||
| 4/1/23 | ||||
| 3/31/23 | 10-K | |||
| 1/22/23 | ||||
| 12/31/22 | 10-Q | |||
| 9/30/22 | 10-Q | |||
| 6/30/22 | 10-Q | |||
| 3/31/22 | 10-K | |||
| 8/25/21 | ||||
| 4/15/21 | ||||
| 1/14/21 | ||||
| 9/1/20 | ||||
| 1/1/20 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 8/08/23 Rocky Mountain Industrials, Inc. 10-Q 6/30/23 54:4.1M Toppan Merrill Bridge/FA |