Idaho Strategic Resources, Inc. 10-Q

ITEM 1: Financial Statements Idaho Strategic Resources, Inc Condensed Consolidated Balance Sheets (Unaudited) March 31, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 2,013,804 $ 1,638,031 Gold sales receivable 1,342,390 909,997 Inventories 545,644 618,313 Joint venture receivable 3,527 1,926 Investment in equity securities 11,100 - Other current assets 180,169 192,025 Total current assets 4,096,634 3,360,292 Property, plant and equipment, net of accumulated depreciation 9,758,588 9,923,386 Mineral properties, net of accumulated amortization 6,805,833 6,527,561 Investment in Buckskin Gold and Silver 334,602 334,252 Investment in joint venture 435,000 435,000 Reclamation bond 327,020 327,020 Deposits 33,500 76,110 Total assets $ 21,791,177 $ 20,983,621 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 644,106 $ 579,541 Accrued payroll and related payroll expenses 242,923 179,149 Note payable related parties, current portion 12,657 12,226 Notes payable, current portion 810,291 859,393 Total current liabilities 1,709,977 1,630,309 Asset retirement obligation 266,116 262,217 Note payable related parties, long term 51,908 62,957 Notes payable, long term 1,125,816 1,315,068 Total long-term liabilities 1,443,840 1,640,242 Total liabilities 3,153,817 3,270,551 Commitments (Note 11) - - Stockholders’ equity: Preferred stock, no par value, 1,000,000 shares authorized; no shares issued or outstanding - - Common stock, no par value, 200,000,000 shares authorized; March 31, 2023- 12,256,523 and December 31, 2022- 12,098,070 shares issued and outstanding 34,124,125 33,245,622 Accumulated deficit ( 18,307,785 ) ( 18,368,384 ) Total Idaho Strategic Resources, Inc stockholders’ equity 15,816,340 14,877,238 Non-controlling interest 2,821,020 2,835,832 Total stockholders' equity 18,637,360 17,713,070 Total liabilities and stockholders’ equity $ 21,791,177 $ 20,983,621 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents Idaho Strategic Resources, Inc. Condensed Consolidated Statements of Operations (Unaudited) For the Three-Month Periods Ended March 31, 2023 and 2022 March 31, 2023 2022 Revenue: Sales of products $ 3,341,596 $ 2,044,417 Total revenue 3,341,596 2,044,417 Costs of Sales: Cost of sales and other direct production costs 2,147,960 1,508,066 Depreciation and amortization 328,037 230,208 Total costs of sales 2,475,997 1,738,274 Gross profit 865,599 306,143 Other operating expenses: Exploration 273,442 396,124 Management 68,911 54,890 Professional services 240,805 79,983 General and administrative 263,298 201,312 Loss on sale of equipment 6,120 - Total other operating expenses 852,576 732,309 Operating income (loss) 13,023 ( 426,166 ) Other (income) expense: Equity income on investment in Buckskin ( 350 ) ( 331 ) Timber revenue net of costs ( 20,724 ) - Unrealized gain on equity security ( 5 ) - Interest income ( 18,932 ) ( 526 ) Interest expense 8,848 47,760 Total other (income) expense ( 31,163 ) 46,903 Net income (loss) 44,186 ( 473,069 ) Net loss attributable to non-controlling interest ( 16,413 ) ( 17,467 ) Net income (loss) attributable to Idaho Strategic Resources, Inc $ 60,599 $ ( 455,602 ) Net income (loss) per common share-basic $ 0.01 $ ( 0.04 ) Weighted average common share outstanding-basic 12,200,857 11,187,648 Net income (loss) per common share-diluted $ 0.01 $ ( 0.04 ) Weighted average common shares outstanding- diluted 12,205,567 11,187,648 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Idaho Strategic Resources, Inc Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) For the Three-Month Periods Ended March 31, 2023 and 2022 Common Stock Shares Common Stock Amount Accumulated Deficit Attributable to Idaho Strategic Resources, Inc Non-Controlling Interest Total Stockholders’ Equity Balance January 1, 2022 10,940,969 $ 26,004,756 $ ( 15,832,955 ) $ 2,892,001 $ 13,063,802 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 2,828 2,828 Issuance of common stock for cash, net of offering costs 360,134 2,701,000 - - 2,701,000 Issuance of common stock for services 3,572 32,326 - - 32,326 Issuance of common stock for warrants exercised 23,057 68,006 - - 68,006 Issuance of common stock for cashless option exercise 28,981 - - - - Conversion of convertible debt to common stock 392,866 1,950,000 - - 1,950,000 Net loss - - ( 455,602 ) ( 17,467 ) ( 473,069 ) Balance March 31, 2022 11,749,579 $ 30,756,088 $ ( 16,288,557 ) $ 2,877,362 $ 17,344,893 Balance January 1, 2023 12,098,070 $ 33,245,622 $ ( 18,368,384 ) $ 2,835,832 $ 17,713,070 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 1,601 1,601 Issuance of common stock for cash, net of offering costs 158,453 878,503 - - 878,503 Net income (loss) - - 60,599 ( 16,413 ) 44,186 Balance March 31, 2023 12,256,523 $ 34,124,125 $ ( 18,307,785 ) $ 2,821,020 $ 18,637,360 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents Idaho Strategic Resources, Inc Condensed Consolidated Statements of Cash Flows (Unaudited) For the Three-Month Periods Ended March 31, 2023 and 2022 March 31, 2023 2022 Cash flows from operating activities: Net income (loss) $ 44,186 $ ( 473,069 ) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 328,037 230,208 Accretion of asset retirement obligation 3,899 2,516 Loss on sale of equipment 6,120 - Issuance of common stock for services - 32,326 Equity income on investment in Buckskin ( 350 ) ( 331 ) Change in operating assets and liabilities: Gold sales receivable ( 432,393 ) ( 398,230 ) Inventories 72,669 ( 392,351 ) Joint venture receivable ( 1,601 ) 1,614 Other current assets 11,856 36,715 Accounts payable and other accrued liabilities 64,565 64,907 Accrued payroll and related payroll expenses 63,774 47,609 Net cash provided (used) by operating activities 160,762 ( 848,086 ) Cash flows from investing activities: Purchases of property, plant, and equipment ( 129,249 ) ( 66,818 ) Deposits on equipment - ( 29,891 ) Proceeds from sale of equipment 8,500 - Additions to mineral property ( 284,272 ) ( 192,112 ) Purchase of equity securities ( 11,100 ) - Net cash used by investing activities ( 416,121 ) ( 288,821 ) Cash flows from financing activities: Proceeds from sale of common stock, net of offering cost 878,503 2,701,000 Proceeds from exercise of common stock warrants - 68,006 Principal payments on notes payable ( 238,354 ) ( 192,054 ) Principal payments on notes payable, related parties ( 10,618 ) ( 10,203 ) Contributions from non-controlling interest 1,601 2,828 Net cash provided by financing activities 631,132 2,569,577 Net change in cash and cash equivalents 375,773 1,432,670 Cash and cash equivalents, beginning of period 1,638,031 1,976,518 Cash and cash equivalents, end of period $ 2,013,804 $ 3,409,188 Non-cash investing and financing activities: Notes payable for equipment purchased $ - $ 241,861 Deposit on equipment paid by lender $ - $ 96,000 Conversion of convertible debt to common stock $ - $ 1,950,000 Deposit applied to equipment $ 42,610 $ - The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 1. The Company and Significant Accounting Policies These unaudited interim condensed consolidated financial statements have been prepared by the management of Idaho Strategic Resources, Inc (IDR) (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of the Company’s management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair statement of the interim condensed consolidated financial statements have been included. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the Company's financial position and results of operations. Operating results for the three-month period ended March 31, 2023, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023. For further information refer to the financial statements and footnotes thereto in the Company’s audited consolidated financial statements for the year ended December 31, 2022, in the Company’s Form 10-K as filed with the Securities and Exchange Commission on March 31, 2023. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiary, the New Jersey Mill Joint Venture (“NJMJV”). Intercompany accounts and transactions are eliminated. The portion of entities owned by other investors is presented as non-controlling interests on the consolidated balance sheets and statements of operations. Revenue Recognition Gold Revenue Recognition and Receivables- Sales of gold sold directly to customers are recorded as revenues and receivables upon completion of the performance obligations and transfer of control of the product to the customer. For concentrate sales, the performance obligation is met, the transaction price can be reasonably estimated, and revenue is recognized generally at the time of shipment at estimated forward prices for the anticipated month of settlement. Due to the time elapsed from shipment to the customer and the final settlement with the customer, prices at which sales of our concentrates will be settled are estimated. Previously recorded sales and accounts receivable are adjusted to estimated settlement metals prices until final settlement by the customer. For sales of doré and metals from doré, the performance obligation is met, the transaction price is known, and revenue is recognized at the time of transfer of control of the agreed-upon metal quantities to the customer by the refiner. Sales and accounts receivable for concentrate shipments are recorded net of charges by the customer for treatment, refining, smelting losses, and other charges negotiated with the customers. Charges are estimated upon shipment of concentrates based on contractual terms, and actual charges typically do not vary materially from estimates. Costs charged by customers include fixed costs per ton of concentrate and price escalators. Refining, selling, and shipping costs related to sales of doré and metals from doré are recorded to cost of sales as incurred. See Note 4 for more information on our sales of products. Other Revenue Recognition -Revenue from harvest of raw timber is recognized when the performance obligation under a contract and transfer of the timber have both been completed. Sales of timber found on the Company’s mineral properties are not a part of normal operations. Inventories Inventories are stated at the lower of full cost of production or estimated net realizable value based on current metal prices. Costs consist of mining, transportation, and milling costs including applicable overhead, depreciation, depletion, and amortization relating to the operations. Costs are allocated based on the stage at which the ore is in the production process. Supplies inventory is stated at the lower of cost or estimated net realizable value. Mine Exploration and Development Costs The Company expenses exploration costs as such in the period they occur. The mine development stage begins once the Company identifies ore reserves which is based on a determination whether an ore body can be economically developed. Expenditures incurred during the development stage are capitalized as deferred development costs and include such costs for drift, ramps, and infrastructure. Costs to improve, alter, or rehabilitate primary development assets which appreciably extend the life, increase capacity, or improve the efficiency or safety of such assets are also capitalized. The development stage ends when the production stage of ore reserves begins. Amortization of deferred development costs is calculated using the units-of-production method over the expected life of the operation based on the estimated recoverable mineral ounces. 7 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 1. The Company and Significant Accounting Policies (continued) Fair Value Measurements When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period that are included in earnings are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At March 31, 2023, the Company had marketable equity securities measured at fair value using level 1 quoted prices, no liabilities required measurement at fair value. At December 31, 2022, the Company had no assets or liabilities that required measurement at fair value on a recurring basis. Accounting for Investments in Joint Ventures and Equity Method Investments Investment in Joint Ventures -For joint ventures where the Company holds more than 50% of the voting interest and has significant influence, the joint venture is consolidated with the presentation of non-controlling interest. In determining whether significant influence exists, the Company considers its participation in policy-making decisions and its representation on the venture’s management committee. For joint ventures in which the Company does not have joint control or significant influence, the cost method is used. For those joint ventures in which there is joint control between the parties, the equity method is utilized whereby the Company’s share of the ventures’ earnings and losses is included in the statement of operations as earnings in joint ventures and its investments therein are adjusted by a similar amount. The Company periodically assesses its investments in joint ventures for impairment. If management determines that a decline in fair value is other than temporary it will write-down the investment and charge the impairment against operations. Equity Method Investments -Investments in companies and joint ventures in which the Company has the ability to exercise significant influence, but do not control, are accounted for under the equity method of accounting. In determining whether significant influence exists, the Company considers its participation in policy-making decisions and representation on governing bodies. Under the equity method of accounting, our share of the net earnings or losses of the investee are included in net income (loss) in the consolidated statements of operations. We evaluate equity method investments whenever events or changes in circumstance indicate the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. At March 31, 2023, and December 31, 2022, the Company's 37 % common stock holding of Buckskin Gold and Silver, Inc. is accounted for using the equity method (Note 10). At March 31, 2023 and December 31, 2022, the Company’s percentage ownership and method of accounting for each joint venture and equity method investment is as follows: March 31, 2023 December 31, 2022 Joint Venture % Ownership Significant Influence? Accounting Method % Ownership Significant Influence? Accounting Method NJMJV 65 % Yes Consolidated 65 % Yes Consolidated Butte Highlands Joint Venture (“BHJV”) 50 % No Cost 50 % No Cost Buckskin Gold and Silver 37 % Yes Equity 37 % Yes Equity Reclassifications Certain prior period amounts have been reclassified to conform to the 2023 financial statement presentation. Reclassifications had no effect on net loss, stockholders’ equity, or cash flows as previously reported. Investments in Equity Securities Investments in equity securities are generally measured at fair value. Unrealized gains and losses for equity securities resulting from changes in fair value are recognized in current earnings. If an equity security does not have a readily determinable fair value, we may elect to measure the security at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment in the same issuer. At the end of each reporting period, we reassess whether an equity investment security without a readily determinable fair value qualifies to be measured at cost less impairment, consider whether impairment indicators exist to evaluate if an equity investment security is impaired and, if so, record an impairment loss. At the end of each reporting period, unrealized gains and losses resulting from changes in fair value are recognized in current earnings. Upon sale of an equity security, the realized gain or loss is recognized in current earnings. 8 Table of Contents 1. The Company and Significant Accounting Policies (continued) New Accounting Pronouncement Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. 2. Going Concern The Company is currently producing from both the open-pit and underground at the Golden Chest Mine. In the past, the Company has been successful in raising required capital from sale of common stock, forward gold contracts, and debt. As a result of its planned production, equity sales and potential debt borrowings or restructurings, management believes cash flows from operations and existing cash are sufficient to conduct planned operations and meet contractual obligations for the next 12 months. 3. Inventories At March 31, 2023 and December 31, 2022, the Company’s inventories consisted of the following: March 31, 2023 December 31, 2022 Concentrate inventory In process $ 68,031 $ 111,741 Finished goods 54,348 111,574 Total concentrate inventory 122,379 223,315 Supplies inventory Mine parts and supplies 301,712 233,465 Mill parts and supplies 43,983 83,963 Core drilling supplies and materials 77,570 77,570 Total supplies inventory 423,265 394,998 Total $ 545,644 $ 618,313 4. Sales of Products Our products consist of both gold flotation concentrates which we sell to a single broker (H&H Metal), and an unrefined gold-silver product known as doré which we sell to a precious metal refinery. At March 31, 2023, metals that had been sold but not finally settled included 5,844 ounces of which 4,500 ounces were sold at a predetermined price with the remaining 1,344 exposed to future price changes. The Company has received provisional payments on the sale of these ounces with the remaining amount due reflected in gold sales receivable. Sales of products by metal type for the three-month periods ended March 31, 2023 and 2022 were as follows: March 31, 2023 2022 Gold $ 3,484,034 $ 2,183,024 Silver 9,522 3,440 Less: Smelter and refining charges ( 151,960 ) ( 142,047 ) Total $ 3,341,596 $ 2,044,417 Sales by significant product type for the three-month periods ended March 31, 2023, and 2022 were as follows: March 31, 2023 2022 Concentrate sales to H&H Metal $ 3,203,491 $ 2,044,417 Dore sales to refinery 138,105 - Total $ 3,341,596 $ 2,044,417 At March 31, 2023 and December 31, 2022, our gold sales receivable balance related to contracts with customers of $ 1,342,390 and $ 909,997 , respectively, consist only of amounts due from H&H Metal. There is no allowance for doubtful accounts. 9 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 5. Related Party Transactions At March 31, 2023 and December 31, 2022, the Company had the following note payable to related parties: March 31, 2023 December 31, 2022 Ophir Holdings LLC, a company owned by two officers of the Company, 3.99% interest, monthly payments of $1,250 with a balloon payment of $39,854 in February 2025 $ 64,565 $ 75,183 Current portion ( 12,657 ) ( 12,226 ) Long term portion $ 51,908 $ 62,957 As of March 31, 2023 and December 31, 2022, there was no accrued interest payable to related parties. Related party interest expense for the three-months ended March 31, 2023 and 2022 is as follows. March 31, 2023 2022 $ 715 $ 1,129 The Company leases office space from certain related parties on a month-to-month basis. $ 1,500 per month is paid to NP Depot, a company owned by the Company’s president, John Swallow and approximately $ 1,700 is paid quarterly to Mine Systems Design which is partially owned by the Company’ vice president Grant Brackebusch. Payments under these short-term lease arrangements are included in general and administrative expenses on the Consolidated Statement of Operations and for the three-months ended March 31, 2023 and 2022 are as follows: March 31, 2023 2022 $ 6,395 $ 6,217 6. Joint Ventures New Jersey Mill Joint Venture Agreement The Company owns 65% of the New Jersey Mill Joint Venture (JV) and has significant influence in its operations . Thus, the venture is included in the consolidated financial statements along with presentation of the non-controlling interest. At March 31, 2023 and December 31, 2022, an account receivable existed with Crescent Silver, LLC, the other joint venture participant (“Crescent”), for $ 3,527 and $ 1,926 , respectively, for shared operating costs as defined in the JV agreement. Butte Highlands JV, LLC (“BHJV”) On January 29, 2016, the Company purchased a 50% interest in Butte Highlands JV, LLC (“BHJV”) for a total consideration of $ 435,000 . Highland Mining, LLC (“Highland”) is the other 50 % owner and manager of the joint venture. Under the agreement, Highland will fund all future project exploration and mine development costs. The agreement stipulates that Highland is manager of BHJV and will manage BHJV until such time as all mine development costs, less $ 2 million are distributed to Highland out of the proceeds from future mine production. The Company has determined that because it does not currently have significant influence over the joint venture’s activities, it accounts for its investment on a cost basis. 7. Earnings per Share Net income (loss) per share is computed by dividing the net amount excluding net income (loss) attributable to a non-controlling interest by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share reflects the potential dilution that could occur from common shares issuable through stock options, warrants, and other convertible securities. Such common stock equivalents are included or excluded from the calculation of diluted net income (loss) per share for each period as follows: March 31, 2023 March 31, 2022 Three Months Three Months Incremental shares included in diluted net income (loss) per share Stock options 4,710 - Stock purchase warrants - - 4,710 - Excluded in diluted net income (loss) per share as inclusion would have an antidilutive effect: Stock options 535,953 455,386 Stock purchase warrants 289,294 646,410 825,247 1,101,796 10 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 8. Property, Plant, and Equipment Property, plant and equipment at March 31, 2023 and December 31, 2022 consisted of the following: March 31, 2023 December 31, 2022 Mill Land $ 225,289 $ 225,289 Building 536,193 536,193 Equipment 4,192,940 4,192,940 4,954,422 4,954,422 Less accumulated depreciation ( 1,292,617 ) ( 1,249,445 ) Total mill 3,661,805 3,704,977 Building and equipment Buildings 611,382 611,382 Equipment 7,077,388 6,927,474 7,688,770 7,538,856 Less accumulated depreciation ( 2,596,219 ) ( 2,324,679 ) Total building and equipment 5,092,551 5,214,177 Land Bear Creek 266,934 266,934 BOW 230,449 230,449 Eastern Star 250,817 250,817 Gillig 79,137 79,137 Highwater 40,133 40,133 Salmon property 136,762 136,762 Total land 1,004,232 1,004,232 Total $ 9,758,588 $ 9,923,386 9. Mineral Properties Mineral properties at March 31, 2023 and December 31, 2022 consisted of the following: March 31, 2023 December 31, 2022 Golden Chest Mineral Property $ 4,111,423 $ 4,088,462 Infrastructure 1,983,340 1,722,028 Total Golden Chest 6,094,763 5,810,490 New Jersey 248,289 248,289 McKinley-Monarch 200,000 200,000 Butte Gulch 124,055 124,055 Potosi 150,385 150,385 Park Copper 78,000 78,000 Less accumulated amortization ( 89,659 ) ( 83,658 ) Total $ 6,805,833 $ 6,527,561 For the three-month periods ended March 31, 2023 and 2022 interest expense was capitalized in association with the ramp access project at the Golden Chest as follows. March 31, 2023 March 31, 2022 $ 22,961 $ 13,003 11 Table of Contents 10. Investment in Buckskin In August 2021, the Company exchanged 45,940 shares of the Company’s common stock for 22 % of Buckskin Gold and Silver Inc. The Company’s closing share price on the date of the agreement (August 18, 2021) was recorded as the cost basis for the property. In October 2021 the Company exchanged an additional 30,358 shares of the Company’s common stock for an additional 15 % of Buckskin. The Company’s closing share price on the date of the exchange (October 15, 2021) was recorded as the cost basis for the investment addition. This investment in Buckskin is being accounted for using the equity method and resulted in recognition of equity income on the investment of $ 350 and $ 331 during the quarters ended March 31, 2023 and 2022 respectively. The Company makes an annual payment of $ 12,000 to Buckskin per a lease covering 218 acres of patented mining claims. As of March 31, 2023, the Company holds 37 % of Buckskin’s outstanding shares. 11. Notes Payable At March 31, 2023 and December 31, 2022, notes payable are as follows: March 31, 2023 December 31, 2022 Building in Salmon, Idaho, 60-month note payable, 7 .00% interest payable monthly through June 2027, monthly payments of $ 2,500 with a balloon payment of $ 260,886 in July 2027 $ 303,928 $ 306,084 Resemin Muki Bolter, 36-month note payable, 7 .00% interest payable monthly through January 2025, monthly payments of $ 14,821 306,623 345,268 Paus 2 yrd. LHD, 48-month note payable, 4.78 % interest rate payable through September 2024, monthly payments of $ 5,181 94,605 108,904 Paus 2 yrd. LHD, 60-month note payable, 3.45 % interest rate payable through July 2024, monthly payments of $ 4,847 75,686 89,493 CarryAll transport, 36-month note payable, 4.5 % interest rate payable monthly through June 2024, monthly payments of $ 627 9,126 10,891 CarryAll transport, 36-month note payable, 4.5 % interest rate payable monthly through February 2024, monthly payments of $ 303 3,264 4,130 Two CarryAll transports, 36-month note payable, 6.3 % interest rate payable monthly through May 2025, monthly payments of $ 1,515 36,756 40,687 CarryAll transport, 36-month note payable, 6.3 % interest rate payable monthly through June 2025, monthly payments of $ 866 21,754 23,987 Atlas Copco loader, 60-month note payable, 10.5 % interest rate payable monthly through June 2023, monthly payments of $ 3,550 10,465 20,660 Sandvik LH203 LHD, 36-month note payable, 4.5 % interest payable monthly through May 2024, monthly payments of $ 10,352 140,931 170,182 Sandvik LH202 LHD, 36-month note payable, 6.9 % interest payable monthly through August 2025, monthly payments of $ 4,933 131,422 143,812 Doosan Compressor, 36-month note payable, 6.99 % interest payable monthly through July 2024, monthly payments of $ 602 9,190 10,820 Caterpillar 306 excavator, 48-month note payable, 4.6 % interest payable monthly through November 2024, monthly payments of $ 1,512 29,047 33,216 Caterpillar 938 loader, 60-month note payable, 6.8 % interest rate payable monthly through August 2023, monthly payments of $ 3,751 18,440 29,256 Caterpillar R1600 LHD, 48-month note payable, 4.5 % interest rate payable through January 2025, monthly payments of $ 17,125 360,955 407,909 Caterpillar AD22 underground truck, 48-month note payable, 6.45 % interest rate payable through June 2023, monthly payments of $ 12,979 38,450 76,287 Small Business Administration EIDL 30 year note payable, 3.75 % interest payable monthly through December 2054, monthly payments of $ 731 162,589 163,287 2022 Dodge Ram, 75-month note payable, 5.99 % interest rate payable monthly through June 2028, monthly payments of $ 1,152 62,148 64,648 2016 Dodge Ram, 75-month note payable, 5.99 % interest rate payable monthly through June 2028, monthly payments of $ 1,190 64,176 66,758 2020 Ford Transit Van, 72-month note payable, 9.24 % interest rate payable monthly through December 2028, monthly payments of $ 1,060 56,551 58,182 Total notes payable 1,936,107 2,174,461 Due within one year 810,291 859,393 Due after one year $ 1,125,816 $ 1,315,068 12 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 11. Notes Payable; continued All notes are collateralized by the property or equipment purchased in connection with each note. Future principal payments of notes payable at March 31, 2023 are as follows: 12 months ended March 31, 2024 $ 810,291 2025 530,713 2026 76,302 2027 49,709 2028 305,052 2029 19,419 Thereafter 144,621 Total $ 1,936,107 The balance of convertible debt at December 31, 2021 consisted of $ 200,000 convertible to Common shares at a price of $ 5.60 per share ( 35,715 shares) and $ 1,750,000 convertible to Common shares at a price of $ 4.90 per share ( 357,151 shares). All of this debt was converted to Common shares as provided in the respective agreements in March 2022. 12. Stockholders’ Equity Stock issuance activity The Company closed a private placement in February 2023. Under the private placement, the Company sold 123,365 shares at $ 5.50 per share and 35,088 shares at $ 5.70 per share for net proceeds of $ 878,503 . The Company closed a private placement in February 2022. Under the private placement, the Company sold 360,134 shares at $ 7.50 per share for net proceeds of $ 2,701,000 . In the first quarter of 2022 the Company issued 3,572 shares of common stock at $ 9.05 per share for services provided for a total value of $ 32,326 . Stock Purchase Warrants Outstanding The activity in stock purchase warrants is as follows: Number of Warrants Exercise Prices Balance December 31, 2021 669,467 $ 2.52 - 7.00 Expired ( 185,304 ) $ 2.52 - 5.60 Exercised quarter 1, 2022 ( 23,057 ) $ 2.52 - 5.60 Exercised in remainder of 2022 ( 171,812 ) $ 5.60 Balance December 31, 2022 and March 31, 2023 289,294 $ 5.60 - 7.00 These warrants expire as follows: Shares Exercise Price Expiration Date 235,722 $ 5.60 October 14, 2023 53,572 $ 7.00 November 12, 2023 289,294 13. Stock Options There were no stock options granted during the three months ended March 31, 2022 or 2023. Activity in the Company’s stock options is as follows: Number of Options Weighted Average Exercise Prices Balance December 31, 2021 507,175 $ 5.25 Granted 180,000 $ 5.21 Exercised quarter 1, 2022 ( 51,789 ) $ 4.22 Exercised in remainder of 2022 ( 64,289 ) $ 4.69 Expired ( 7,143 ) $ 1.96 Forfeited ( 28,001 ) $ 5.56 Balance December 31, 2022 and March 31, 2023 535,953 $ 5.47 Outstanding and exercisable at March 31, 2023 535,953 $ 5.47 At March 31, 2023, outstanding stock options have a weighted average remaining term of approximately 1.58 years and have an intrinsic value of $ 1,800 . There were no stock options exercised during the first three months of 2023. 13 Table of Contents