UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Form 10-Q
(Mark(Mark One)
x☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2016
2023
or
o☐ 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:333-1850460-55402
Rocky Mountain Industrials, Inc. (formerly RMR Industrials, Inc.)
(NameExact 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
9301 Wilshire Blvd., Suite 312
Beverly Hills, CA 9021080111
(Address of principal executive offices)
(310) 492-5010(720) 614-5213
(Registrant'sRegistrant’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. Yeso☐ Nox
☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx☐ Noo
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, a smaller reporting company, or emerging growth company. See definitionthe definitions of "accelerated“large accelerated filer,” “accelerated filer,” “smaller reporting company,” and large accelerated filer"“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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). Yeso☐ Nox
☒
As of March 8, 2017,February 13, 2024, the registrant had 35,785,858 shares of Class A Common Stock, and 1,114,2904,973,832 shares of Class B Common Stock outstanding and 118.5 shares of Preferred Stock outstanding.
RMRROCKY 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“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,"“believes,” “estimates,” “intends,” “plan,” “expects,” “may,” “will,” “should,” “predicts,” “anticipates,” “continues,” or "potential,"“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, or our achievements, or industry results, expressed or implied by such forward-looking statements. Such forward-lookinguncertainties 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– “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.
events except as otherwise required by law.
Unless otherwise specified or required by context, as used in this Quarterly Report, the terms "we," "our," "us"“we,” “our,” “us” and the "Company" refer“Company” refers collectively to Rocky Mountain Industrials, Inc., (“RMI”) formerly RMR, Industrials, Inc., and its wholly-ownedwholly/majority-owned subsidiaries, RMR Aggregates, Inc., RMR Logistics, Inc., RMR Industrial Minerals, Inc., and RMR Aggregates, Inc. The term "fiscal year" refers to our fiscal year ending March 31.Rail Land Company, LLC. Unless otherwise indicated, the term "common stock"“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 United States generally accepted accounting principles (U.S. GAAP)in the United States (GAAP).
2
CAUTIONARY NOTE REGARDING EXPLORATION STAGE STATUS
RMRAND 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
4
PART I – FINANCIAL INFORMATION
RMRROCKY MOUNTAIN INDUSTRIALS, INC.
INDEX TO UNAUDITED FINANCIAL STATEMENTS
December 31, 2016
Condensed Consolidated Balance Sheets (Unaudited)
| December 31, 2016 | ||||||||
| (Unaudited) | March 31, 2016 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 25,868 | $ | 356,287 | ||||
| Accounts receivable | 54,188 | - | ||||||
| Inventory | 1,591 | - | ||||||
| Prepaid expenses | 4,699 | - | ||||||
| Total current assets | 86,346 | 356,287 | ||||||
| Property, plant and equipment, less accumulated depreciation | 3,524,512 | - | ||||||
| Intangible assets, net | 41,000 | - | ||||||
| Deferred financing costs | 66,800 | - | ||||||
| Deposits | 31,119 | - | ||||||
| Other assets | 10,000 | 7,500 | ||||||
| Total assets | $ | 3,759,777 | $ | 363,787 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 830,007 | $ | 531,491 | ||||
| Accounts payable, related party | 2,118,233 | 1,368,233 | ||||||
| Accrued liabilities | 51,161 | - | ||||||
| Accrued liabilities, related party | 1,620,743 | 1,075,743 | ||||||
| Total current liabilities | 4,620,144 | 2,975,467 | ||||||
| Note payable, net of unamortized discount | 1,376,446 | - | ||||||
| Equipment loan payable | 528,699 | - | ||||||
| Capital lease payable | 128,273 | - | ||||||
| Accrued reclamation liability | 45,596 | - | ||||||
| Total liabilities | 6,699,158 | 2,975,467 | ||||||
| Stockholders' Deficit | ||||||||
| Preferred Stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding | - | - | ||||||
| Class A Common Stock, $0.001 par value; 2,000,000,000 shares authorized; 35,785,858 shares issued and outstanding | 35,786 | 35,786 | ||||||
| Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 1,112,623 and 990,957 shares issued and outstanding on December 31, 2016 and March 31, 2016, respectively | 1,113 | 991 | ||||||
| Common stock subscribed | (300,000 | ) | - | |||||
| Additional paid-in capital | 4,376,258 | 1,370,103 | ||||||
| Accumulated deficit | (7,159,859 | ) | (4,018,560 | ) | ||||
| Total RMR Industrials stockholders’ deficit | (3,046,702 | ) | (2,611,680 | ) | ||||
| Non-controlling interest | 107,321 | - | ||||||
| Total stockholders’ deficit | $ | (2,939,381 | ) | $ | (2,611,680 | ) | ||
| Total liabilities and stockholders’ deficit | $ | 3,759,777 | $ | 363,787 | ||||
| | | | | | | |
| | 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 | |
| For the three | For the three | For the nine | For the nine | |||||||||||||
| months ended | months ended | months ended | months ended | |||||||||||||
| December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||
| Revenue | $ | 202,292 | $ | - | $ | 202,292 | $ | - | ||||||||
| Cost of goods sold | 172,815 | - | 172,815 | - | ||||||||||||
| Gross profit | 29,477 | - | 29,477 | - | ||||||||||||
| Selling, general and administrative | 1,339,657 | 682,647 | 3,101,921 | 2,362,363 | ||||||||||||
| Loss from operations | (1,310,180 | ) | (682,647 | ) | (3,072,444 | ) | (2,362,363 | ) | ||||||||
| Interest expense (income), net | 126,195 | (342 | ) | 125,927 | (342 | ) | ||||||||||
| Loss before income tax provision | (1,436,375 | ) | (682,305 | ) | (3,198,371 | ) | (2,362,021 | ) | ||||||||
| Income tax expense | - | - | 1,050 | - | ||||||||||||
| Net loss | (1,436,375 | ) | (682,305 | ) | (3,199,421 | ) | (2,362,021 | ) | ||||||||
| Add: Net loss attributed to noncontrolling interest | 58,122 | - | 58,122 | - | ||||||||||||
| Net loss attributable to RMR Industrials, Inc. | $ | (1,378,253 | ) | $ | (682,305 | ) | $ | (3,141,299 | ) | $ | (2,362,021 | ) | ||||
| Basic and diluted loss attributable to RMR Industrials, Inc. per common share | $ | (0.48 | ) | $ | (0.25 | ) | $ | (1.11 | ) | $ | (0.90 | ) | ||||
| Weighted average shares outstanding | 2,888,256 | 2,710,929 | 2,834,311 | 2,637,912 | ||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
RMR Industrials, Inc.ROCKY MOUNTAIN INDUSTRIALS, INC.
Consolidated Statements of Cash FlowsChanges in Stockholder Equity (Unaudited)
| Nine months ended December 31, 2016 | Nine months ended December 31, 2015 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flow from operating activities | ||||||||
| Net loss | $ | (3,199,421 | ) | $ | (2,362,021 | ) | ||
| Depreciation and amortization expense | 54,527 | 5,956 | ||||||
| Stock-based compensation | 237,476 | 139,126 | ||||||
| Amortization of debt discount | 71,074 | - | ||||||
| Paid-In-Kind interest | 54,814 | - | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (54,188 | ) | - | |||||
| Prepaid expenses | (4,699 | ) | - | |||||
| Inventory | (1,591 | ) | - | |||||
| Deposits | (31,119 | ) | - | |||||
| Accounts payable | 298,516 | 389,416 | ||||||
| Accounts payable, related parties | 750,000 | 876,581 | ||||||
| Accrued liabilities | 51,161 | - | ||||||
| Accrued liabilities, related parties | 545,000 | 630,000 | ||||||
| Net cash used in operating activities | (1,228,450 | ) | (320,942 | ) | ||||
| Acquisition of business, net of cash | (2,827,624 | ) | - | |||||
| Purchase of property, plant and equipment | (86,672 | ) | - | |||||
| Purchase of intangibles and other assets | (2,500 | ) | (5,000 | ) | ||||
| Net cash used in investing activities | (2,916,796 | ) | (5,000 | ) | ||||
| Payments on equipment loan | (3,173 | ) | - | |||||
| Proceeds from loan payable | 2,250,000 | - | ||||||
| Payments on debt issuance costs | (131,800 | ) | - | |||||
| Proceeds from issuance of common stock | 1,699,800 | 1,475,590 | ||||||
| Payments on offering costs toward issuance of common stock | - | (311,825 | ) | |||||
| Net cash provided by financing activities | 3,814,827 | 1,163,765 | ||||||
| Net (decrease) increase in cash | (330,419 | ) | 837,823 | |||||
| Cash at beginning of period | 356,287 | 4,733 | ||||||
| Cash at end of period | $ | 25,868 | $ | 842,556 | ||||
| Supplemental cash flow information | ||||||||
| Cash paid for interest | $ | 402 | $ | - | ||||
| Cash paid for income taxes | $ | 1,050 | $ | - | ||||
Supplemental disclosure of non-cash transactions
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 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 |
During the nine months ended December 31, 2016, the Company valued conversion rights related to a note purchase agreement of $769,000 as a debt discount. The Company also recognized $237,476 of stock-based compensation expense related to issuance of stock options and assumed $531,872 of equipment loan payable and $128,273 of capital lease payable in connection with an acquisition of a business.
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
December 31, 2016
NOTE A – FORMATION, CORPORATE CHANGES AND MATERIAL MERGERS AND ACQUISITIONS
Online Yearbook was incorporated in the State of Nevada on August 6, 2012. Online Yearbook was a development stage company with the principal business objective of developing and marketing an online yearbook.
1. ORGANIZATION
On November 17, 2014, Rocky Mountain Resource Holdings LLC, a Nevada limited liability company (the “Purchaser”) becameJanuary 1, 2020, the majority shareholder of Online Yearbook, by acquiring 5,200,000 shares of common stock of Online Yearbook (the “Shares”), or 69.06% of the issued and outstanding shares of common stock, pursuant to stock purchase agreements with Messrs. El Maraana and Salah Blal. The Shares were acquired for an aggregate purchase price of $357,670. The Purchaser was the source of the funds used to acquire the Shares. In connection with Online Yearbook’s receipt of approval from the Financial Industry Regulatory Authority (“FINRA”), effective December 8, 2014, Online Yearbook amended its Articles of Incorporation to changeCompany changed its name from “Online Yearbook”RMR Industrials, Inc. to “RMRRocky Mountain Industrials, Inc.”
RMRRocky Mountain Industrials, Inc. (the “Company” or “RMRI”, “RMI”, “we”, “our”, “us”) seeks to acquire and consolidate complimentarycomplementary industrial assets. Typically these small to mid-sized assets are the core manufacturer and supplier of specific bulk commodity minerals and chemicals distributed to the global manufacturer industry. RMRI’sRMI’s consolidation strategy is to assemble a portfolio of mature and value-add industrial commodities businesses to generate scalable enterprises with a vastbroad portfolio of products and services addressing a common and stable customer base.
On February 27, 2015 (the “Closing Date”), the Company entered into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, OLYB Acquisition Corporation, a Nevada corporation andThrough our wholly owned subsidiary, of the Company (“Merger Sub”) and RMR IP, Inc., a Nevada corporation (“RMR IP”). In accordance with the terms of Merger Agreement, on the Closing Date, Merger Sub merged with and into RMR IP (the “Merger”), with RMR IP surviving the Merger as our wholly owned subsidiary.
RMR IP was formed to acquire and consolidate complimentary industrial commodity assets through capitalizing on the volatile oil markets, down cycles in commodity markets, and other ancillary opportunities. RMR IP is focused on managing the supply chain in order to offer a large and diverse set of products and services.
The Merger Agreement includes customary representations, warranties and covenants made by the Company, Merger Sub and RMR IP as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the Merger Agreement and are not intended to provide factual, business, or financial information about the Company, Merger Sub and RMR IP. Moreover, some of those representations and warranties (i) may not be accurate or complete as of any specified date, (ii) may be subject to a contractual standard of materiality different from those generally applicable to shareholders or different from what a shareholder might view as material, (iii) may have been used for purposes of allocating risk among the Company, Merger Sub and RMR IP, rather than establishing matters as facts, and/or (iv) may have been qualified by certain disclosures not reflected in the Merger Agreement that were made to the other party in connection with the negotiation of the Merger Agreement and generally were solely for the benefit of the parties to the Merger Agreement.
For financial reporting purposes, the Merger represents a “reverse merger” rather than a business combination and RMR IP is deemed to be the accounting acquirer in the transaction. Consequently, the assets and liabilities and the historical operations that will be reflected in the Company’s future financial statements will be those of RMR IP. The Company’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of RMR IP after consummation of the Merger, and the historical financial statements of the Company before the Merger will be replaced with the historical financial statements of RMR IP before the Merger in all future filings with the SEC.
On March 10, 2015, we formed United States Talc and Minerals Inc. (“US Talc and Minerals”), incorporated in the State of Nevada as a wholly-owned subsidiary of the Company for the purpose of facilitating future acquisitions.
On July 28, 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.
On October 12, 2016, RMR Aggregates acquired substantially all of the assets from CalX Minerals, LLC, a Colorado limited liability company (“CalX”) through an Asset Purchase Agreement. Pursuant to the terms of the Asset Purchase Agreement, RMR Aggregates agreed to purchase, and CalX agreed to sell, substantially all of the assets associated with the business of operatingwe operate the Mid-Continent Limestone Quarry on 41 BLM unpatented placer mining claims 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 mining claims, improvements, access rights, water rights, equipment, inventory, contracts, permits, certain intellectual property rights,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 other tangibleby expanding our business to include rail transportation solutions and intangible assets associated with the limestone mining operation.services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying unaudited interim consolidated financial statements for the period ended December 31, 2016 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 forStates. The following notes to these interim consolidated financial informationstatements 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 Securities and Exchange Commission (SEC) Regulation S-X rule 8-03.generally accepted accounting principles in the United States (“GAAP”). The unauditedcondensed consolidated financial statements include the financial condition and results of operations of our wholly-owned subsidiary, US Talc and Minerals, as well as our majority-owned subsidiary RMR Aggregates,subsidiaries, where intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the unaudited consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of December 31, 2016 and the results of operations and cash flows for the periods then ended. The financial data and other information disclosed in these notes to the interim consolidated financial statements related to the period are unaudited.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the accompanying consolidated financial statements. These consolidated financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.
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.
Cash and Cash Equivalents
The Company considers all highly liquid securities with original maturities of three months or less at the date of purchase to be cash equivalents. As of December 31, 2016, the Company had cash of $25,868 and no cash equivalents. The Company may occasionally maintain cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”). The amounts are held with major financial institutions and are monitored by management to mitigate credit risk.
Accounts Receivable
Accounts receivables are recorded at the invoiced amount and do not bear interest. The Company analyzes collectability based on historical payment patterns and macroeconomic factors which may affect the customers’ industry. Past due balances over 90 days based on payment terms are reviewed individually for collectability. The Company does not have any off-balance sheet credit exposure related to its customers. Concentration of credit risk is limited to certain customers to whom we make substantial sales. As of December 31, 2016, the Company had one large customer that accounted for approximately 92% of our accounts receivable balance. To reduce risk, we routinely assess the financial strength of our most significant customers, using standard credit risk evaluation methods with reference to publicly available and customer supplied information, and monitor the amounts owed and taking appropriate action when necessary. As a result, we believe that accounts receivable credit risk exposure is limited.
Inventory
Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Significant improvements are capitalized, while maintenance and repair expenses are charged to operations as incurred. The straight-line method of depreciation is used for substantially all of the assets for financial reporting purposes.
Depletion of mineral reserves is determined on a unit-of-extraction basis for financial reporting purposes, based upon proven and probable reserves, and on a percentage depletion basis for tax purposes. Depletion was immaterial for the period ended December 31, 2016.
Intangible assets
Intangible assets with estimable useful lives are amortized on a straight-line basis over their respective estimated lives and reviewed annually for impairment.
Deposits
Deposits consist of a security deposit in connection with an office lease.
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Factors considered include:
The Company evaluated long-lived assets based upon an estimate of future undiscounted cash flows. Recoverability of these assets is measured by comparing the carrying value to the future net undiscounted cash flows expected to be generated by the asset. An impairment loss is recognized when the carrying value exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset. Future net undiscounted cash flows include estimates of future revenues and expenses which are based on projected growth rates. The Company continually uses judgment when applying these impairment rules to determine the timing of the impairment tests, the undiscounted cash flows used to assess impairments and the fair value of a potentially impaired asset.
Accounting for Asset Retirement Obligations and Accrued Reclamation Liability
The Company provides for obligations associated with the retirement of long-lived assets and the associated asset retirement costs. The fair value of a liability for an asset retirement obligation is recognized in the period in which it is identified, if a reasonable estimate of fair value can be made. The associated fair value of asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Costs are estimated in current dollars, inflated until the expected time of payment, using an inflation rate of 2.15%, and then discounted back to present value using a credit-adjusted rate to reflect the Company’s credit rating.
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
Level 2 inputs are used to estimate theThe fair value of share-based compensation.notes payable was $20,871,986 and $14,000,947 as of December 31, 2023 and March 31, 2023, respectively.
Level 3 inputs are used to estimate the fair value of accrued reclamation liabilities.
Net LossEarnings (loss) per Common Share
Basic net lossearnings (loss) per common share is calculated by dividing the net loss attributable to common stockholdersincome (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 net lossearnings (loss) per common share is calculated by dividing the net loss attributable to common stockholdersincome (loss) by the weighted average number 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. There are no such anti-dilutive common share equivalents outstanding as December 31, 2016 which were excluded frommethod if the calculation of diluted loss per common share.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax bases of the Company's assets and liabilities and their financial statement reported amounts. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the yearis not anti-dilutive. In periods in which the differencesCompany reports a net loss, diluted earnings per share is the same as basic earnings per share since dilutive common shares are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
A valuation allowance is recorded by the Company when it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.
Additionally, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly, the Company establishes reserves for uncertain tax positions. The Company has not recognized interest or penalties in its statement of operations and comprehensive loss since inception.
Recent Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU"), No. 2016-02,Leases (ASC 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The standard is effective for us in the first quarter of fiscal 2019, with early adoption permitted. We currently do not expect the adoption of this updateassumed to have a materialbeen issued, as their effect on our consolidated resultsis anti-dilutive. Participating securities (primarily convertible preferred stock) of operations and financial position.
In March 2016, the FASB issued ASU No. 2016-09,Improvements to Employee Share-Based Payment Accounting, which simplifies the accounting and reporting for share-based compensation, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The standard is effective for us in the first quarter of fiscal 2017, with early adoption permitted. We currently do not expect the adoption of this update to have a material effect on our consolidated results of operations and financial position.
In April 2015, the FASB issued a new accounting standard to simplify the presentation of debt issuance costs. ASU No. 2015-03,Simplifying the Presentation of Debt Issuance Costs, changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity will present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The ASU is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We currently do not expect the adoption of this update to have a material effect on our consolidated results of operations and financial position.
In May 2014, the FASB issued a new accounting standard to improve and converge the financial reporting requirements for revenue from contracts with customers. ASU No. 2014-09,Revenue from Contracts with Customers, prescribes a five-step model for revenue recognition that will replace most existing revenue recognition guidance in U.S. GAAP. The ASU will supersede nearly all existing revenue recognition guidance under U.S. GAAP and provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. ASU No. 2014-09 allows for either full retrospective or modified retrospective adoption. In July 2015, the FASB postponed the effective date of the new revenue standard by one year to the first quarter of 2018. Early adoption is permitted, but no earlier than 2017. Management is currently assessing the effect that the adoption of this standard will have on the consolidated financial statements.
NOTE C – GOING CONCERN
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.
The Company’s net loss and working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements624,032 equivalent common shares have been prepared on a going-concern basis, which contemplates the realization of assetsincluded in basic and the satisfaction of liabilities in the normal course of business. The financial statementsdiluted weighted average shares outstanding, for the threenine months ended December 31, 2016 do not include any adjustments2023.
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 reflectprovide for the possible future effectsdeveloper portion of infrastructure costs of the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern. The Company may never become profitable, or if it does, it may not be able to sustain profitability on a recurring basis.
Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.
The abilityRail Park. A portion of the Company$21M Construction Note was used to continue as a going concernrepay the Secured Promissory Note. The Construction Note is dependent upon its ability to successfully accomplishsecured by the business plan and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
During the next year, the Company’s foreseeable cash requirements will relate to continual developmentunderlying property of the operationsRail 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 business, maintaining its good standing$21M Construction Note. The amendment cancelled the $2M Line of Credit and makingincreased the requisite filings with the SecuritiesConstruction Note to $29.5M and Exchange Commission,includes a reborrowing amount of up to $8.5M. The Construction Note incurs interest at prime rate plus 2.25% and the paymenthas an amended maturity date of expenses associated with research and development. The Company may experience a cash shortfall and be required to raise additional capital.February 17, 2025.
Historically, it has mostly relied upon fundsNet proceeds from the sale of shares of stock and from acquiring loansRail Park lots shall be used to finance its operations and growth. Management may raise additional capital through future public or private offeringsreduce the then outstanding principal balance of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.
In the past year, the Company funded operations by using cash proceeds received through the issuance of common stock and proceeds from related party debt. For the coming year, the Company plans to continue to fund the Company through debt and securities sales and issuances until the company generates enough revenues through the operations as stated above.
NOTE D – BUSINESS COMBINATION
On October 12, 2016, pursuant to an Asset Purchase Agreement dated October 7, 2016, the Company acquired substantially all of the assets of CalX Minerals, LLC, a Colorado limited liability company (“CalX”). Pursuant to the terms of the Asset Purchase Agreement, the Company agreed to purchase substantially all of the assets associated with the business of operating the Mid-Continent Limestone Quarry on 41 BLM unpatented placer mining claims in Garfield County, Colorado, including 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. The acquisition of the CalX assets will promote the development and implementation of the Company’s limestone mining operations in Colorado.
The aggregate purchase price for the CalX assets was $2,827,624, including the assumption by the Company of certain assumed liabilities specified in the Asset Purchase Agreement. The Asset Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions. The closing of the transactions contemplated by the Asset Purchase Agreement was subject to the satisfaction of customary closing conditions.
In connection with the acquisition of CalX, the Company entered into a $2,250,000Construction Note Purchase Agreement, the net proceeds of which, together with the Company’s cash on hand, were used as cash consideration for the acquisition of CalX and to pay fees and expenses in connection with the foregoing. See Note E.
The fair value of the total consideration transferred, net of cash acquired, was $2,827,624. The acquisition of CalX has been accounted for using the acquisition method of accounting, which requires the assets acquired and liabilities assumed be recognized at their respective fair values as of the acquisition date. As of March 8, 2017, the purchase price allocation remains preliminary as the Company completes its assessment of property and certain reserves, and reviews CalX’s existing accounting policies.
The following table summarizes the Company’s preliminary purchase price allocation for the CalX acquisition:
| Preliminary Allocation | ||||
| Property, plant and equipment | $ | 3,491,399 | ||
| Intangible assets | 41,000 | |||
| Total assets acquired | 3,532,399 | |||
| Equipment loan payable | 531,872 | |||
| Capital lease payable | 128,273 | |||
| Accrued reclamation liability | 44,630 | |||
| Total liabilities assumed | 704,775 | |||
| Net assets acquired | $ | 2,827,624 | ||
The Company used the income, market, or cost approach (or a combination thereof) for the preliminary valuation, and used valuation inputs and analyses that were based on market participant assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability. The Company’s estimates related to this valuation are considered to be critical accounting estimates because they are susceptible to change from period to period based on our judgments about a variety of factors and due to the uncontrollable variability of market factors underlying them. For example, in performing assessments of the fair value of these assets, the Company makes judgments about the future performance business of the acquired business, economic, regulatory, and political conditions affecting the net assets acquired, appropriate risk-related rates for discounting estimated future cash flows, reasonable estimates of disposal values, and market royalty rate.
Pro Forma Financial Information (unaudited)
The following unaudited supplemental pro forma information presents the financial results as if the CalX assets had been acquired on the first day of the 2015 fiscal year. This information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on the first day of the preceding fiscal year, nor is it indicative of any future results.
| Year ended March 31, 2016 | Year ended March 31, 2015 | |||||||
| Revenue | $ | 2,374,573 | $ | 1,776,957 | ||||
| Net loss | $ | (2,966,958 | ) | $ | (1,049,516 | ) | ||
NOTE E – NOTE PAYABLE
On October 3, 2016, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with RMR Aggregates, Inc., and Central Valley Administrators Inc., a Nevada corporation (“CVA”). Pursuant to the terms of the Note Purchase Agreement, RMR Aggregates sold to CVA, and CVA purchased from RMR Aggregates, a 10% promissory note in an aggregate principal amount of $2,250,000 (the “Note”). The Note has a maturity date of October 3, 2018, and accrues interest at a rate of 10% per annum.
Under the termseighty five percent (85%) of net proceeds of the Note Purchase Agreement, RMR Aggregates also agreedfirst lot sale and ninety percent (90%) of net proceeds from subsequent lot sales. Distribution or dividends of Rail Land Company to issue 20,000 sharesany of common stock of RMR Aggregates (the “RMRA Shares”) to CVA, which represents 20% of RMR Aggregates’ total issued and outstanding common stock. CVA shall haveits members or other legal beneficial owner may not be paid without the right, at any time, to convert the RMRA Shares into shares of Class B common stockconsent of the bank. Rail Land Company atis to maintain a ratio of 1 share of RMRA Shares being converted into 7.5 shares of the Company’s Class B common stock. RMR Aggregates will also have the right, at any time after October 3, 2017 and after the Note is no longer outstanding, to call the RMRA Shares in exchange for shares of Class B common stock of the Company using the same ratio; provided, however, that the amount of RMRA Shares that may be called in exchange for shares of the Company’s Class B common stock shall be limited to the extent necessary to ensure that, following such exercise, CVA and its affiliates will not beneficially own in excess of 4.99% of the Company’s total issued and outstanding common stock.
The Note Purchase Agreement provides, among other things, that CVA shall have a liquidation right upon an event of default arising from the failure by RMR Aggregates to repay the outstanding principal amount of the Note on the maturity date, meaning CVA can cause RMR Aggregates to sell its assets until it repays the outstanding amount due under the Note. RMR Aggregates shall have the right to call the Note at any time at par plus accrued interest thereunder.
The conversion feature in the Note Purchase Agreement was valued at $769,000 and recorded as a discount to the CVA Note.
NOTE F – EQUIPMENT LOAN AND CAPITAL LEASE PAYABLE
The Company has entered into various installment sales contracts with an equipment manufacturer in connectionminimum cash balance with the CalX acquisition, pursuant to which we acquired equipment with an aggregate principal valuebank of approximately $531,872. The installment sales contracts require payments over 42-60 months at a fixed interest rate from 1.99% to 4.78%. The Company’s obligations under these contracts are collateralized by the equipment purchased.$1M, tested quarterly.
The Company also has a capital lease agreement, which was assumed in connection with the CalX acquisition. The capital lease has a remaining term
| | | | | | | | | | | | |
| | | | | | | | | 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 | | | | | | |
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Future payments on capital lease obligations are as follows:
| Fiscal year ended March 31: | ||||
| 2017 | $ | 21,449 | ||
| 2018 | 42,897 | |||
| 2019 | 42,897 | |||
| 2020 | 28,598 | |||
| 2021 | - | |||
| Total future minimum lease payments | $ | 135,841 | ||
NOTE G –6. TRANSACTIONS WITH RELATED PARTIES
Since inception, the Company accrued $2,118,233 in amounts owed to related parties for services performed or reimbursementAs of costs on behalf of the Company. In addition,December 31, 2023, the Company has accrued $1,620,000$2,202,500 for unpaid officers’ compensation expense in accordance with consulting agreements with our Non-executive Board Chairman and Chief Executive Officer and President.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’days prior written notice.
On February 1, 2015, RMR IP entered into a management services agreement with Industrial Management LLC (“IM”), to provide services to RMR IP and affiliated entities, which include assistance in operational and administrative matters, identifying, analyzing, and structuring growth initiatives, and potential strategic acquisitions. As compensation for these services, RMR IP will pay to IM an annual cash management fee in an amount equal to the greater of 2% of the Company’s annual gross revenues or $1,000,000, and a development fee with respect to any capital project incurred by RMR IP equal to 2% of total project costs. In addition, IM has the option to be assigned all available royalties from RMR IP’s mineral holdings, leases or interests greater than 75% of net revenue interests for all mineral rights or production of minerals. At IM’s sole discretion, it may choose to accept a preferred convertible security with a 15% dividend accruing quarterly in lieu of cash for some or all of the annual management fee, development fee and royalty assignments. Such preferred convertible securities shall be convertible into either Class A Common Stock or Class B Common Stock (as applicable) at a conversion price equal to fifty percent of the market price of the applicable Class B Common Stock on the day prior to the date of issuance. In addition, these preferred convertible securities are callable for a cash, for a period of six months following the date of issuance; provided, however, that if called, IM shall have the option to convert the called preferred stock into either Class A Common Stock or Class B Common Stock (as applicable) at a conversion price equal to sixty-six and two thirds percent of the market price of the applicable Class B Common Stock on the business day immediately preceding the issuance date of preferred stock, and will include a blocker provision. In connection with the management services agreement with IM, RMR IP entered into a registration rights agreement which requires RMR IP to register for resale any securities issued as consideration under the management services agreement. The registration rights agreements provide for both demand and piggy back registration rights, and requires that IM not transfer any shares of RMR IP during a 90 day period following the effective date of a registration statement. The registration rights agreement terminates when the shares held by IM become eligible for resale pursuant to Rule 144.7. SHAREHOLDERS’ EQUITY
NOTE H – STOCKHOLDERS’ DEFICIT
Reverse Stock Split
On September 4, 2015, the Company implemented a reverse stock split of all of its authorized and issued and outstanding shares of Class B Common Stock in ratio of one-for-twenty. All historical and per share amounts have been adjusted to reflect the reverse stock split.
Preferred Stock
The Company has authorized 50,000,000 shares of preferred stock for issuance. At December 31, 2016, no preferredIn April 2021, the Board of Directors of the Company authorized 118.47 shares as Series A Preferred Stock and designated 48.27 shares as Series A-1 Convertible Preferred Stock, 19.45 shares as Series A-2 Convertible Preferred Stock and 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 $8,000 (“Accruing Dividends”), subject to appropriate adjustment in the event of any stock was issueddividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock, whether or not declared, and outstanding.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 $25.00 per share, the Series A-2 Preferred Stock conversion price is $21.00 per share and the Series A-3 Preferred Stock conversion price is $15.00 per share.
In the event of an underwritten public offering, public uplist, or qualified equity issuance of at least $10,000,000 in gross proceeds and a minimum price per share of $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 2,100,000,000 shares of common stock for issuance, including 2,000,000,000 shares of Class A Common Stock and 100,000,000 shares of Class B Common Stock. At December 31, 2016, the Company had 35,785,858 and 1,112,623 shares issued and outstanding of Class A Common Stock and Class B Common Stock, respectively.
The holders of Class A Common Stock will have the right to vote on all matters on which stockholders have the right to vote. The holders of Class B Common Stock will 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 will 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 will beare entitled to receive identical per-share consideration upon a merger, conversion or exchange of the Company with another entity, and will have equal rights upon dissolutions,a dissolution, liquidation or winding-up.
During the nine months ended December 31, 2016, the Company entered into subscription agreements with accredited investors (the "Purchasers") to offer and sell 146,666 unitswinding-up of the Company’s securities (the “Units”) at $10.00 - $15.00 per Unit for which the Company received $1,700,000 in initial proceeds and $300,000 in common stock subscribed. Each Unit entitles the Purchaser to one share of Class B Common Stock of the Company and a warrant to purchase one or one and a half shares of Class B Common Stock at an exercise price of $10.00 - $15.00 with a term of one or two years. The Units issued by the Company for the nine months ended December 31, 2016:Company.
| Shares of | ||||||||||||||||||
| Units Sold | Proceeds | Common Stock | Warrants | Warrant Price | Warrant Term | |||||||||||||
| 40,000 | $ | 400,000 | 40,000 | 80,000 | $ | 10.00 | 2 years | |||||||||||
| 50,000 | 750,000 | 50,000 | 50,000 | $ | 15.00 | 1 year | ||||||||||||
| 56,666 | 850,000 | 56,666 | 85,000 | $ | 15.00 | 1 year | ||||||||||||
NOTE I –8. SHARE-BASED COMPENSATION
The RMR Industrials, Inc. 2015 Equity Incentive Plan (the "2015 Plan"“2015 Plan”), authorizes the issuance of up to 30% of the outstanding shares of Class B Common Stock at any time during the 2015 Plan, for issuance of options, shares or rightspursuant to acquire our Class B common stockawards made by the Company’s board of directors. As of December 31, 2016,2023, there were 470,575808,786 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 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 ten years from the date of grant.
Valuation Assumptions for Stock Options
During No stock option awards were granted during the threenine months ended December 31, 2016,2023.
Stock Awards
During the nine months ended December 31, 2023, the Company granted options to our employees to purchase an aggregate of 400,000no restricted shares of ourClass B Common Stock. Restricted shares vest ratably over a four-year vesting period, subject to continued service and a performance condition. During the nine months ended December 31, 2023, no restricted shares of common stock with estimated total grant-date fair values of $828,800. The Company recorded stock-based compensation related to stock options of $237,476 duringwere forfeited.
9. SEGMENT REPORTING
For the three and nine months ended December 31, 2016.2023 and 2022, the Company has two reportable segments: Aggregates and Rail Park. The grant dateAggregates 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 one construction company, Customer A that accounted for 78% of segment revenue for the three months ended December 31, 2023 and had two construction companies, Customer A that accounted for approximately 61% of segment revenue and Customer B that accounted for 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 39% and Customer C accounted for approximately 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.
| | | | | | | | | | | | | | | | | | | |
| | | 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 |
| $ | 116,713 | $ | — | $ | — | $ | 116,713 | | $ | 243,303 | $ | — | $ | — | $ | 243,303 | |
Gross profit (loss) |
|
| 37,951 | | — | | — |
| 37,951 | | | (106,876) | | — | | — |
| (106,876) | |
Selling, general and administrative |
|
| 150,131 | | — | | 871,488 |
| 1,021,619 | | | 144,945 | | — | | 1,260,450 |
| 1,405,395 | |
Property, plant and equipment, net |
|
| 2,054,684 | | — | | — |
| 2,054,684 | | | 2,276,729 | | — | | 12,177 |
| 2,288,906 | |
Land under development |
|
| — | | 24,137,831 | | — |
| 24,137,831 | | | — | | 10,982,866 | | — |
| 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 | | $ | 453,085 | $ | — | $ | — | $ | 453,085 | | $ | 714,884 | $ | — | $ | — | $ | 714,884 | |
Gross profit (loss) | | | 57,082 | | — | | — |
| 57,082 | | | (206,440) | | — | | — |
| (206,440) | |
Selling, general and administrative | | | 513,302 | | — | | 2,749,587 |
| 3,262,889 | | | 434,773 | | — | | 5,064,718 |
| 5,499,491 | |
Property, plant and equipment, net | | | 2,054,684 | | — | | — |
| 2,054,684 | | | 2,276,729 | | — | | 12,177 |
| 2,288,906 | |
Land under development | | | — | | 24,137,831 | | — |
| 24,137,831 | | | — | | 10,982,866 | | — |
| 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 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 $65.2 million, approximately $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.
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Gain on Sale of Assets
In August 2023, the Rail Park sold approximately 60 acres of land under development for a total sales price of $13.1 million and recognized a net gain of $8.2 million.
10. 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 $366,000. This obligation is expected to be settled within the next 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 wasas 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 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:
| | | |
Balance at April 1, 2023 |
| $ | 144,707 |
Liabilities incurred | |
| — |
Accretion expense | |
| 10,589 |
Balance at December 31, 2023 | | $ | 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 grant using the Black-Scholes option pricing model, assuming no dividendsinfrastructure completion date anticipated to be within 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 $1.5M divided into 5 increments of approximately $0.3M. However, the reimbursement amount will be reduced if usage at the Rail Park exceeds certain thresholds beginning 24 months after the effective date and annually thereafter until 72 months after the following assumptions:effective date. The infrastructure construction has not commenced as of February 13, 2024.
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Stock Option Activity
Stock Options | Grant Date Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in Years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at April 1, 2016 | - | $ | - | |||||||||||||
| Granted | 400,000 | $ | 6.34 | |||||||||||||
| Exercised | - | $ | - | |||||||||||||
| Forfeited | - | $ | - | |||||||||||||
| Expired | - | $ | - | |||||||||||||
| Outstanding at December 31, 2016 | 400,000 | $ | 6.34 | 9.9 | $ | - | ||||||||||
| Vested and expected to vest December 31, 2016 | 99,999 | $ | 6.34 | 9.9 | $ | - | ||||||||||
| Exercisable at December 31, 2016 | 99,999 | $ | 6.34 | 9.9 | $ | - | ||||||||||
NOTE J – SUBSEQUENT EVENTS
On January 3, 2017, RMR IP amended its ArticlesTable of Incorporation to change its name from “RMR IP, Inc.” to “RMR Logistics, Inc.”Contents
In January 2017, the Company entered into subscription agreements with accredited investors to offer and sell 21,667 Units of the Company’s securities at $15.00 per Unit for which the Company received $325,000 in proceeds.
On February 16, 2017, the Company renamed US Talc and Minerals to RMR Industrial Minerals, Inc.
Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition Andand Results Ofof 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. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in anyThis discussion includes forward-looking statements made by us, or on our behalf. We disclaim any obligation to update 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 onin August 6, 2012 under the name “Online Yearbook” with the principal business objective of developing and marketing online yearbooks for schools, companies and government agencies.
OnIn November 17, 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, of our common stock, 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.
OnIn December 8, 2014, we changed our name to “RMR Industrials, Inc.” in connection with the change in our business plan.
On February 27, 2015 (the “Closing Date”), we entered into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and amongon January 1, 2020, the Company OLYB Acquisition Corporation, a Nevada corporation and wholly owned subsidiary of the Company (“Merger Sub”) and RMR IP, Inc., a Nevada corporation (“RMR IP”). In accordance with the terms of Merger Agreement, on the Closing Date, Merger Sub merged with and into RMR IP (the “Merger”), with RMR IP surviving the Merger as our wholly owned subsidiary. Chad Brownstein and Gregory M. Dangler are the directors of the Company and co-owners of RMRH which was the majority shareholder of the Company prior to the Merger. Additionally, Chad Brownstein and Gregory Dangler were indirect controlling shareholders and directors of RMR IP prior to the Merger. As such, the Merger was among entities under the common control of Chad Brownstein and Gregory Dangler. On January 3, 2017, we amended the Articles of Incorporation of RMR IP to changechanged its name from RMR Industrials, Inc. to “RMR Logistics,Rocky Mountain Industrials, Inc.”
On March 10, 2015, we formed United States Talc and Minerals Inc. (“US Talc and Minerals”), incorporated in the State of Nevada as a wholly-owned subsidiary of the Company for the purpose of facilitating future acquisitions. On February 16, 2017, we amended the Articles of Incorporation of US Talc and Minerals to change its name to “RMR Industrial Minerals, Inc.”
On May 11, 2016, our Board of Directors changed our fiscal year end from September 30 to March 31.
OnIn July 28, 2016, we formed RMR Aggregates, Inc., a Colorado corporation (“RMR Aggregates”), as our wholly ownedwholly-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.
We planIn October 2016, pursuant to develop intellectual property and acquire and consolidate complementary industrial assets. Typically these small to mid-sized assets are the core manufacturer and supplier of specific bulk commodity minerals and chemicals distributed to the global manufacturer industry. Our consolidation strategy is to assemble a portfolio of mature and value-add industrial commodities businesses to generate scalable enterprises with a large portfolio of products and services addressing a common and stable customer base. We believe that smaller, legacy-owned industrial companies will benefit from economies of scale and professional asset allocation. Our acquisition strategy seeks to capitalize on the price differential between public company and private company valuations, while also providing the platform to access capital markets and professional management oversight.
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Recent Developments
On October 7, 2016, RMR Aggregates entered into an Asset Purchase Agreement with CalX Minerals, LLC, a Colorado limited liability company (“CalX”). Pursuant to the terms of the Asset Purchase Agreement,, RMR Aggregates agreed tocompleted the purchase and CalX agreed to sell,of substantially all of the assets associated with the business of operating the Mid-Continent Limestone Quarry on 41 Bureau of Land ManagementBLM unpatented placer mining claims in Garfield County, Colorado, includingColorado. 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 acquisitionCompany’s development of the CalX assets will promoteRail Park is intended to expand the development and implementation of the Company’s and RMR Aggregates’ limestone mining operations in Colorado.
The aggregate purchase pricecustomer base for the CalX assets is $2,827,624, including the assumptionour products by RMR Aggregates of certain assumed liabilities specifiedutilizing rail freight capabilities to reach customers in the Asset Purchase Agreement. The closing of the acquisition occurred on October 12, 2016, but for tax, accountinggreater Denver area and financial purposes, the closing was deemed effective as of September 30, 2016. The purchase price was funded through existing cash on handby expanding our business to include rail transportation solutions and proceeds received from a note purchase agreement, as described in further detail under “Liquidity and Capital Resources” below.services.
In connection with the acquisition of the CalX assets, we entered into various installment sales contracts with Komatsu Financial Limited Partnership, an equipment manufacturer, on or around December 1, 2016, pursuant to which we acquired equipment with an aggregate principal value of approximately $531,872. The installment sales contracts require payments over terms of 42 to 60 months, with fixed interest rates ranging from 1.99% to 4.78%. The Company’s obligations under these contracts are secured by the purchased equipment.
Also in connection with the CalX transaction, the Company assumed a capital lease agreement with Komatsu Financial Limited Partnership, an equipment manufacturer for mining equipment. The capital lease has a remaining term of 38 months, with total future minimum lease payments of approximately $135,841.
The foregoing descriptions of the installment sales contracts and capital lease agreement do not purport to be complete, and are qualified in their entirety by reference to the full text of such agreements, which are attached hereto as Exhibits 10.11, 10.12, 10.13 and 10.14, and incorporated by reference herein.
Results of Operations
Comparison of the Threethree and Nine Month Periodsnine months Ended December 31, 20162023 and December 31, 20152022
Revenues
Our revenues for the threethree-month and nine monthnine-month periods ended December 31, 2016 were $202,292. No revenues were reported in2023 was $116,713 and $453,085. This compares to revenue for the same periodsperiod ended December 31, 2022 of $243,303 and $714,884. The decrease in revenues for the prior year. The increasethree-month and nine-month period ended December 31, 2023, is the result of a decrease in revenue was attributed todemand from the acquisitionCompany’s primary customer.
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Cost of Goods Sold
Our cost of goods sold for the threethree-month and nine monthnine-month periods ended December 31, 2016 were $172,815. No2023 was $78,762 and $396,003. This compares to cost of goods sold were reported infor the same periodsperiod ended December 31, 2022 of the prior year.$350,179 and $921,324. The increasedecrease in cost of goods sold was attributed tofor the acquisitionthree-month and nine-month period ended December 31, 2023 is generally the result of the CalX assetsdecrease in October 2016.revenues.
OperatingSelling, General and Administrative Expenses
Our operatingselling, general and administrative expenses for the threethree-month and nine monthnine-month periods ended December 31, 20162023 were $1,339,657$1,021,619 and $3,101,921, respectively.$3,262,889. This compares to operating expenses for the three and nine month periodssame period ended December 31, 20152022 of $682,647$1,405,395 and 2,362,363, respectively. Operating$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, personnel and other administrative expenses.depreciation and amortization. The increase in operating expenses for the comparative three and nine month periods was due to higher spending in consulting and personnel costs, stock-based compensation and incremental operating costs relatingdecrease is primarily related to the CalX asset acquisition.Company managing selling, general and administrative costs as we continue to operate in a development stage.
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Interest Expense, (Income), net
Our interest expense, net for the threethree-month and nine monthnine-month periods ended December 31, 2016 was $126,1952023 were $483,271 and $125,927, respectively,$1,052,318, compared to $342$279,365 and $696,817 of interest incomeexpense for the three and nine monthsame periods ended December 31, 2015. The increase in interest expense was attributed to a $2,250,000 note payable issued to an accredited investor in October 2016.2022.
Net Loss Attributable to RMR Industrials, Inc.
Income/(Loss)
Our net loss for the threethree-month period was $1,466,939 and net income of $3,963,485 for the nine month periodsperiod ended December 31, 2016 was $1,378,253 and $3,141,299, respectively.2023. This compares to a net loss for the three and nine monthsame periods ended December 31, 20152022 of $682,305$1,791,636 and $2,362,021, respectively. The comparative increases in net loss were due to increases in our operating expenses, as described above.$6,408,657.
Liquidity and Capital Resources
Balance Sheets
As of December 31, 2016,2023, we had current assets of $86,346,$6,982,716, total current liabilities of $4,620,144$8,408,975 and working capital deficitdeficiency of $4,533,798.$1,426,259. We have incurred an accumulated loss of $7,159,859$69,147,657 since inception. Our independent auditors issued an audit opinion for our financial statements for the six month transition period ended March 31, 2016, which includes a statement expressing substantial doubt as to our ability to continue as a going concern due to our limited liquidity and our lack of revenues.
Estimated Expenses
We will be seeking additional capital to execute our business plan and reach positive cash flow from operations. Our base monthly expenses are $50,000 per month. In order to successfully execute our business plan, the net proceeds of a $10-20 million offering will be required to finance our planned acquisitions and for general working capital purposes.
We do not internally generate adequate cash flows to support our existing operations. Moreover, the historical and existing capital structure of our Company is not adequate to fund our planned growth. Our current cash requirements are significant due to our business plan which will depend on future acquisitions. We anticipate generating losses through 2017. We anticipate that we will be able to raise sufficient amounts of working capital in the near term through debt or equity offerings as may be required to meet short-term obligations.
Recent Financing Arrangements
On July 1, 2015, we filed with the Securities and Exchange Commission a registration statement for a public offering of 700,000 units at an offering price of $10.00 per unit. Each unit is comprised of one share of our Class B Common Stock and a warrant to purchase one share of our Class B Common Stock at an initial exercise price of $12.50. In November 2015, we sold 147,500 units to several accredited investors for $1,475,000 in proceeds under this offering.
On March 28, 2016, we issued 10,000 shares of our Class B common stock valued at $100,000 in accordance with a Loan Settlement Agreement and Release for repayment of $100,000 of outstanding liabilities owed to an affiliate of the Company.
On June 30, 2016, we entered into a subscription agreement and sold 40,000 units of our securities to an accredited investor at a price of $10.00 per unit for aggregate proceeds of approximately $400,000. Each unit is comprised of one share of Class B Common Stock and a warrant to purchase one share of our Class B Common Stock at an exercise price of $10.00 per share, exercisable over a two (2) year period.
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From September through December 2016, we entered into subscription agreements with accredited investors and sold 106,666 units of our securities at a price of $15.00 per unit for aggregate proceeds of approximately $1,600,000. Each unit is comprised of one share of Class B Common Stock and a warrant to purchase one and a half shares of our Class B Common Stock at an exercise price of $15.00 per share, exercisable over a one (1) year period.
On October 3, 2016, we entered into a note purchase agreement (the “Note Purchase Agreement”) with RMR Aggregates and Central Valley Administrators Inc., a Nevada corporation (“CVA”). Pursuant to the terms of the Note Purchase Agreement, RMR Aggregates sold to CVA, and CVA purchased from RMR Aggregates, a 10% promissory note in an aggregate principal amount of $2,250,000 (the “Note”). The Note has a maturity date of October 3, 2018, and accrues interest at a rate of 10% per annum. RMR Aggregates will use the proceeds from the Note for transaction financing, transaction-related fees and expenses, the CalX acquisition and working capital and general corporate purposes. The obligations of RMR Aggregates andpast years, the Company under the Note Purchase Agreement and Note are securedfunded operations by a security agreement, a share pledge agreement and a voting agreement. The Note Purchase Agreement provides, among other things, that CVA shall have a liquidation right upon an event of default arising from the failure by RMR Aggregates to repay the outstanding principal amount of the Note on the maturity date, meaning CVA can cause RMR Aggregates to sell its assets until it repays the outstanding amount due under the Note. RMR Aggregates has the right to call the Note at any time at par plus accrued interest thereunder. The Note Purchase Agreement contains certain covenants and restrictions, including, for example, provisions stating that so long as the Note is outstanding, RMR Aggregates will not incur any indebtedness other than the Note and subordinated indebtedness in an aggregate amount of up to $1,500,000, or issue any additional shares of its common stock without CVA’s consent.
In January 2017, we entered into subscription agreements with accredited investors and sold 21,667 units of our securities at a price of $15.00 per unit for aggregateusing cash proceeds of approximately $325,000. Each unit is comprised of one share of Class B Common Stock and a warrant to purchase one and a half shares of our Class B Common Stock at an exercise price of $15.00 per share, exercisable over a one (1) year period.
Other than as stated above, we currently do not have any arrangements for additional financing and we may not be able to obtain financing when required. Our future is dependent upon our ability to obtain financing, a successful marketing and promotion program and, further in the future, achieving a profitable level of operations. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. We will require additional funds to maintain our reporting status with the SEC and remain in good standing with the state of Nevada. There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed. Any failure to secure additional financing may force us to modify our business plan. In addition, we cannot be assured of profitability in the future.
Going Concern
We have incurred net losses since our inception on October 15, 2014 through December 31, 2016 totaling $7,159,859 and have completed the preliminary stages of our business plan. We anticipate incurring additional losses before realizing any revenues and will depend on additional financing in order to meet our continuing obligations and ultimately, to attain profitability. Our ability to obtain additional financing, whetherreceived through the issuance of additional equity or throughcommon and preferred stock and proceeds from debt financing. However, several significant transactions have occurred that have positively impacted the assumptionnet financial position of debt, is uncertain. Accordingly, our independent auditors’ report on ourthe Company and strengthened its financial statements for the transition period ended March 31, 2016 includes an explanatory paragraph regarding concerns about ourposition and its ability to continuemeet future obligation over the next 12 months without a need to raise additional funds as a going concern, including additional information contained in the notesit has traditionally been required to our financial statements describing the circumstances leading to this disclosure. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business.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.
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Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Required
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 arewere 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 information requiredour 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 disclosed by usin 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 reports that we fileaudit or submit under the Exchange Act is: (i) recorded, processed, summarizedreview 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 reported, within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to comply with our management, including our chief executive officer and chief financial officer, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure.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, 20162023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
None.
None.
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.
From September through December 2016, we entered into subscription agreements with accredited investors and sold 106,666 units of our securities at a price of $15.00 per unit for aggregate proceeds of approximately $1,600,000. Each unit is comprised of one share of Class B Common Stock and a warrant to purchase one and a half shares of our Class B Common Stock at an exercise price of $15.00 per share, exercisable over a one (1) year period. We intend to use the proceeds from the sale for general working capital purposes and acquisitions. This sale and issuance of shares was exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involved in any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D.
In January 2017, we entered into subscription agreements with accredited investors and sold 21,667 units of our securities at a price of $15.00 per unit for aggregate proceeds of approximately $325,000. Each unit is comprised of one share of Class B Common Stock and a warrant to purchase one and a half shares of our Class B Common Stock at an exercise price of $15.00 per share, exercisable over a one (1) year period. We intend to use the proceeds from the sale for general working capital purposes and acquisitions. This sale and issuance of shares was exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involved in any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D.
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Item 3.Defaults Upon Senior Securities
None.
None.
Item 4. Mine Safety Disclosures
Information regarding mine safety violations is included in Exhibit 95 to this quarterly report.
None.
None.
None.
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Exhibit Number | Exhibit
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10.10 | | |
31.1 *
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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 |
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* | Filed herewith |
* Filed herewith21
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. | ||
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Date: February 13, 2024 | By: | /s/ Brian Fallin |
Brian Fallin | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
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Date: February 13, 2024 | By: | /s/ Brian H. Aratani |
Brian H. Aratani | ||
Chief Financial Officer | ||
(Principal Financial Officer and Principal Accounting Officer) | ||
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