Idaho Strategic Resources, Inc. 10-Q

ITEM 1: FINANCIAL STATEMENTS Idaho Strategic Resources, Inc. Condensed Consolidated Balance Sheets (Unaudited) September 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 1,971,845 $ 1,638,031 Gold sales receivable 1,127,604 909,997 Inventories 701,493 618,313 Joint venture receivable 1,637 1,926 Investment in equity securities 6,677 - Other current assets 333,459 192,025 Total current assets 4,142,715 3,360,292 Property, plant and equipment, net of accumulated depreciation 10,554,522 9,923,386 Mineral properties, net of accumulated amortization 7,154,092 6,527,561 Investment in Buckskin Gold and Silver 337,217 334,252 Investment in joint venture 435,000 435,000 Reclamation bond 251,310 327,020 Deposits 25,000 76,110 Total assets $ 22,899,856 $ 20,983,621 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 498,374 $ 579,541 Accrued payroll and related payroll expenses 253,696 179,149 Note payable related parties, current portion - 12,226 Notes payable, current portion 1,007,101 859,393 Total current liabilities 1,759,171 1,630,309 Asset retirement obligation 274,091 262,217 Note payable related parties, long term - 62,957 Notes payable, long term 1,511,383 1,315,068 Total long-term liabilities 1,785,474 1,640,242 Total liabilities 3,544,645 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; September 30, 2023- 12,256,523 and December 31, 2022- 12,098,070 shares issued and outstanding 34,124,125 33,245,622 Accumulated deficit ( 17,559,313 ) ( 18,368,384 ) Total Idaho Strategic Resources, Inc stockholders’ equity 16,564,812 14,877,238 Non-controlling interest 2,790,399 2,835,832 Total stockholders' equity 19,355,211 17,713,070 Total liabilities and stockholders’ equity $ 22,899,856 $ 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 and Nine-Month Periods Ended September 30, 2023 and 2022 September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Revenue: Sales of products $ 3,301,221 $ 9,879,332 $ 1,745,278 $ 6,148,187 Total revenue 3,301,221 9,879,332 1,745,278 6,148,187 Costs of Sales: Cost of sales and other direct production costs 1,831,847 6,079,697 1,728,214 5,345,409 Depreciation and amortization 363,442 1,034,521 245,824 717,939 Total costs of sales 2,195,289 7,114,218 1,974,038 6,063,348 Gross profit (loss) 1,105,932 2,765,114 ( 228,760 ) 84,839 Other operating expenses: Exploration 435,439 916,250 747,217 1,530,122 Management 58,998 183,477 158,625 266,998 Professional services 80,856 444,899 85,429 301,446 General and administrative 117,178 504,241 603,274 1,078,563 (Gain) loss on disposal of equipment - ( 224 ) 64,739 68,641 Total other operating expenses 692,471 2,048,643 1,659,284 3,245,770 Operating income (loss) 413,461 716,471 ( 1,888,044 ) ( 3,160,931 ) Other (income) expense: Equity income on investment in Buckskin ( 1,608 ) ( 2,965 ) ( 542 ) ( 1,213 ) Timber revenue net of costs - ( 20,724 ) - - Gain on forgiveness of SBA loan - - - ( 10,000 ) Loss on investment in equity securities 1,543 4,423 - - Interest income ( 23,560 ) ( 61,253 ) ( 322 ) ( 878 ) Interest expense 33,103 52,999 22,244 85,902 Total other (income) expense 9,478 ( 27,520 ) 21,380 73,811 Net income (loss) 403,983 743,991 ( 1,909,424 ) ( 3,234,742 ) Net loss attributable to non-controlling interest ( 16,696 ) ( 65,080 ) ( 15,005 ) ( 66,123 ) Net income (loss) attributable to Idaho Strategic Resources, Inc. $ 420,679 $ 809,071 $ ( 1,894,419 ) $ ( 3,168,619 ) Net income (loss) per common share-basic $ 0.03 $ 0.07 $ ( 0.16 ) $ ( 0.27 ) Weighted average common share outstanding-basic 12,256,523 12,238,172 12,032,901 11,677,167 Net income (loss) per common share-diluted $ 0.03 $ 0.07 $ ( 0.16 ) $ ( 0.27 ) Weighted average common shares outstanding- diluted 12,263,318 12,243,055 12,032,901 11,677,167 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 and Nine-Month Periods Ended September 30, 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 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 18,202 18,202 Issuance of common stock for cash, net of offering costs 138,665 980,107 - - 980,107 Issuance of common stock for warrants exercised 70,919 397,147 - - 397,147 Issuance of common stock for cashless option exercise 26,584 - - - - Net loss - - ( 818,598 ) ( 33,651 ) ( 852,249 ) Balance June 30, 2022 11,985,747 32,133,342 ( 17,107,155 ) 2,861,913 17,888,100 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 1,682 1,682 Issuance of common stock for warrants exercised 100,893 565,005 - - 565,005 Options issued to management, directors, and employees - 547,275 - - 547,275 Issuance of common stock for cashless option exercise 11,430 - - - - Net loss - - ( 1,894,419 ) ( 15,005 ) ( 1,909,424 ) Balance September 30, 2022 12,098,070 $ 33,245,622 $ ( 19,001,574 ) $ 2,848,590 $ 17,092,638 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 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 16,409 16,409 Net income (loss) - - 327,793 ( 31,971 ) 295,822 Balance June 30, 2023 12,256,523 34,124,125 ( 17,979,992 ) 2,805,458 18,949,591 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 1,637 1,637 Net income (loss) - - 420,679 ( 16,696 ) 403,983 Balance September 30, 2023 12,256,523 $ 34,124,125 $ ( 17,559,313 ) $ 2,790,399 $ 19,355,211 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 Nine-Month Periods Ended September 30, 2023 and 2022 September 30, 2023 2022 Cash flows from operating activities: Net income (loss) $ 743,991 $ ( 3,234,742 ) Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 1,034,521 717,939 Loss (gain) on disposal of equipment ( 224 ) 68,641 Accretion of asset retirement obligation 11,874 11,342 Stock based compensation - 547,275 Issuance of common stock for services - 32,326 Gain on forgiveness of SBA loan - ( 10,000 ) Loss on investment in equity securities 4,423 - Equity income on investment in Buckskin ( 2,965 ) ( 1,213 ) Change in operating assets and liabilities: Gold sales receivable ( 217,607 ) ( 20,568 ) Inventories ( 83,180 ) ( 394,200 ) Joint venture receivable 289 2,760 Other current assets ( 141,434 ) 78,568 Accounts payable and accrued expenses ( 81,167 ) 169,590 Accrued payroll and related payroll expenses 74,547 25,127 Net cash provided (used) by operating activities 1,343,068 ( 2,007,155 ) Cash flows from investing activities: Purchases of property, plant, and equipment ( 467,655 ) ( 1,145,186 ) Deposits on equipment ( 25,000 ) ( 31,584 ) Proceeds from sale of equipment 8,500 - Purchase of reclamation bonds - ( 222,800 ) Refund of reclamation bonds 75,710 - Additions to mineral property ( 645,962 ) ( 451,012 ) Purchase of equity securities ( 11,100 ) - Net cash used by investing activities ( 1,065,507 ) ( 1,787,414 ) Cash flows from financing activities: Proceeds from sale of common stock, net of issuance cost 878,503 3,681,107 Proceeds from exercise of common stock warrants - 1,030,158 Principal payments on notes payable ( 766,714 ) ( 629,322 ) Principal payments on notes payable, related parties ( 75,183 ) ( 30,916 ) Contributions from non-controlling interest 19,647 22,712 Net cash provided by financing activities 56,253 4,073,739 Net change in cash and cash equivalents 333,814 279,170 Cash and cash equivalents, beginning of period 1,638,031 1,976,518 Cash and cash equivalents, end of period $ 1,971,845 $ 2,255,688 Non-cash investing and financing activities: Deposit on equipment applied to purchase $ 76,110 $ 96,000 Notes payable for equipment and land purchase $ 1,110,737 $ 1,189,056 Conversion of convertible debt to common stock $ - $ 1,950,000 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 consolidated 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 consolidated financial position and results of operations. Operating results for the three and nine-month periods ended September 30, 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 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. 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 September 30, 2023, the Company had equity securities measured at fair value using level 1 quoted prices and 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. 7 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 1. The Company and Significant Accounting Policies (continued) 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 September 30, 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 September 30, 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: September 30, 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 Inc. 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. New Accounting Pronouncement Accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“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 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 September 30, 2023 and December 31, 2022, the Company’s inventories consisted of the following: September 30, 2023 December 31, 2022 Concentrate inventory In process $ 157,284 $ 111,741 Finished goods 44,185 111,574 Total concentrate inventory 201,469 223,315 Supplies inventory Mine parts and supplies 278,875 233,465 Mill parts and supplies 143,579 83,963 Core drilling supplies and materials 77,570 77,570 Total supplies inventory 500,024 394,998 Total $ 701,493 $ 618,313 8 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 4. Sales of Products Our products consist of both gold flotation concentrates which we sell to a single broker (H&H Metals), and an unrefined gold-silver product known as doré which we sell to a precious metal refinery. At September 30, 2023, metals that had been sold but not finally settled included 6,512 ounces of which 4,182 ounces were sold at a predetermined price with the remaining 2,330 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 and nine-month periods ended September 30, 2023 and 2022 were as follows: September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Gold $ 3,458,174 $ 10,347,001 $ 1,890,626 $ 6,620,745 Silver 14,283 37,630 3,034 9,992 Less: Smelter and refining charges ( 171,236 ) ( 505,299 ) ( 148,382 ) ( 482,550 ) Total $ 3,301,221 $ 9,879,332 $ 1,745,278 $ 6,148,187 Sales by significant product type for the three and nine-month periods ended June 30, 2023, and 2022 were as follows: September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Concentrate sales to H&H Metals $ 3,301,221 $ 9,741,227 $ 1,745,278 $ 5,844,571 Dore sales to refinery - 138,105 - 303,616 Total $ 3,301,221 $ 9,879,332 $ 1,745,278 $ 6,148,187 At September 30, 2023 and December 31, 2022, our gold sales receivable balance related to contracts with customers of $ 1,127,604 and $ 909,997 , respectively, consist only of amounts due from H&H Metals. There is no allowance for doubtful accounts. 5. Related Party Transactions At December 31, 2022, the Company had a note payable to Ophir Holdings, a company owned by two officers and one former officer of the Company, with a balance of $ 75,183 of which $ 12,226 was due within one year and the remaining $ 62,957 due thereafter. The Company paid the remaining amount due to Ophir Holdings on May 10, 2023. This payment resulted in a negative net interest charge for the nine-months ended September 30, 2023. Related party interest expense for the three and nine-months ended September 30, 2023 and 2022 is as follows. September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months $ - $ ( 2,676 ) $ 924 $ 3,081 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’s 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 and nine-months ended September 30, 2023 and 2022 are as follows: September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months $ 6,120 $ 18,555 $ 6,217 $ 18,651 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 September 30, 2023 and December 31, 2022, an account receivable existed with Crescent Silver, LLC, the other joint venture participant (“Crescent”), for $ 1,637 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. 9 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 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: September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months Incremental shares included in diluted net income (loss) per share Stock options 6,795 4,883 - - Stock purchase warrants - - - - 6,795 4,883 - - Potentially dilutive shares excluded from diluted net income (loss) per share as inclusion would have an antidilutive effect: Stock options 321,449 321,449 542,525 542,525 Stock purchase warrants 289,294 289,294 289,294 289,294 610,743 610,743 831,819 831,819 8. Property, Plant, and Equipment Property, plant and equipment at September 30, 2023 and December 31, 2022 consisted of the following: September 30, 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 ( 1,381,865 ) ( 1,249,445 ) Total mill 3,572,557 3,704,977 Building and equipment Buildings 611,382 611,382 Equipment 8,535,801 6,927,474 9,147,183 7,538,856 Less accumulated depreciation ( 3,169,450 ) ( 2,324,679 ) Total building and equipment 5,977,733 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 $ 10,554,522 $ 9,923,386 9. Mineral Properties Mineral properties at September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 Golden Chest Mineral Property $ 4,141,904 $ 4,088,462 Infrastructure 2,314,548 1,722,028 Total Golden Chest 6,456,452 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 ( 103,089 ) ( 83,658 ) Total $ 7,154,092 $ 6,527,561 10 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 9. Mineral Properties (continued) For the three and nine-month periods ended September 30, 2023 and 2022, interest expense was capitalized in association with the ramp access project at the Golden Chest as follows. September 30, 2023 September 30, 2022 Three Months Nine Months Three Months Nine Months $ 11,107 $ 53,442 $ 11,180 $ 32,097 10. Investment in Buckskin The investment in Buckskin is being accounted for using the equity method and resulted in recognition of equity income on the investment of $ 1,608 and $ 2,965 for the respective three and nine-month periods ended September 30, 2023, and $ 542 and $ 1,213 in 2022 for the respective three and nine-month periods ended September 30, 2022. The Company makes an annual payment of $ 12,000 to Buckskin per a mineral lease covering 218 acres of patented mining claims. As of September 30, 2023, the Company holds 37 % of Buckskin’s outstanding shares. 11. Notes Payable At September 30, 2023 and December 31, 2022, notes payable are as follows: September 30, 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 $ 299,502 $ 306,084 Resemin Muki Bolter, 36-month note payable, 7 .00% interest payable monthly through January 2025, monthly payments of $ 14,821 227,279 345,268 Paus 2 yrd. LHD, 48-month note payable, 4.78 % interest rate payable through September 2024, monthly payments of $ 5,181 65,492 108,904 Paus 2 yrd. LHD, 60-month note payable, 3.45 % interest rate payable through July 2024, monthly payments of $ 4,847 47,711 89,493 CarryAll transport, 36-month note payable, 4.5 % interest rate payable monthly through June 2024, monthly payments of $ 627 5,537 10,891 CarryAll transport, 36-month note payable, 4.5 % interest rate payable monthly through February 2024, monthly payments of $ 303 1,501 4,130 Two CarryAll transports, 36-month note payable, 6.3 % interest rate payable monthly through May 2025, monthly payments of $ 1,515 28,710 40,687 CarryAll transport, 36-month note payable, 6.3 % interest rate payable monthly through June 2025, monthly payments of $ 866 17,183 23,987 Two CarryAll transports, 48-month note payable, 5.9% interest rate payable monthly through June 2027, monthly payments of $ 1,174 47,284 - Atlas Copco loader, 60-month note payable, 10.5 % interest rate payable monthly through June 2023, monthly payments of $ 3,550 - 20,660 Sandvik LH203 LHD, 36-month note payable, 4.5 % interest payable monthly through May 2024, monthly payments of $ 10,352 105,994 170,182 Sandvik LH202 LHD, 36-month note payable, 6.9 % interest payable monthly through August 2025, monthly payments of $ 4,933 81,435 143,812 Doosan Compressor, 36-month note payable, 6.99 % interest payable monthly through July 2024, monthly payments of $ 602 5,844 10,820 Caterpillar 306 excavator, 48-month note payable, 4.6 % interest payable monthly through November 2024, monthly payments of $ 1,512 20,565 33,216 Caterpillar 938 loader, 60-month note payable, 6.8 % interest rate payable monthly through August 2023, monthly payments of $ 3,751 - 29,256 Caterpillar R1600 LHD, 48-month note payable, 4.5 % interest rate payable through January 2025, monthly payments of $ 17,125 265,446 407,909 Caterpillar AD22 underground truck, 48-month note payable, 6.45 % interest rate payable through June 2023, monthly payments of $ 12,979 - 76,287 Caterpillar AD30 underground truck, 40-month note payable, 8.01 % interest rate payable through October 2026, monthly payments of $29,656 969,440 - Small Business Administration EIDL 30 year note payable, 3.75 % interest payable monthly through December 2054, monthly payments of $ 731 160,899 163,287 2022 Dodge Ram, 75-month note payable, 5.99 % interest rate payable monthly through June 2028, monthly payments of $ 1,152 57,033 64,648 2016 Dodge Ram, 75-month note payable, 5.99 % interest rate payable monthly through June 2028, monthly payments of $ 1,190 58,895 66,758 2020 Ford Transit Van, 72-month note payable, 9.24 % interest rate payable monthly through December 2028, monthly payments of $ 1,060 52,734 58,182 Total notes payable 2,518,484 2,174,461 Due within one year 1,007,101 859,393 Due after one year $ 1,511,383 $ 1,315,068 All notes are collateralized by the property or equipment purchased in connection with each note. Future principal payments of notes payable at September 30, 2023 are as follows: 12 months ended September 30, 2024 $ 1,007,101 2025 577,853 2026 399,778 2027 349,131 2028 35,624 2029 6,490 Thereafter 142,507 Total $ 2,518,484 11 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 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 of common stock at $ 5.50 per share and 35,088 shares of common stock at $ 5.70 per share for net proceeds of $ 878,503 . No shares were issued in the second or third quarter of 2023. The Company closed a private placement in February 2022. Under the private placement, the Company sold 360,134 shares of common stock at $ 7.50 per share for net proceeds of $ 2,701,000 . In the nine-months ended September 30, 2022, the Company sold 138,665 shares of common stock for net proceeds of $ 980,107 . In the nine-months ended September 30, 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 . Also, in the nine-months ended September 30, 2022, the Company issued 392,866 shares of the Company’s common stock in exchange for $ 1,950,000 of debt at $ 4.96 per share. Stock Purchase Warrants Outstanding In the nine-months ended September 30, 2022, 194,869 shares of common stock were issued in exchange for outstanding warrants for net proceeds of $ 1,030,158 . 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 ( 194,869 ) $ 2.52 - 5.60 Balance December 31, 2022 and September 30, 2023 289,294 $ 5.60 - 7 .00 These warrants expire as follows: Shares Exercise Price Expiration Date 235,722 $ 5.60 October 15, 2023 53,572 $ 7 .00 November 12, 2023 289,294 These outstanding warrants were amended and extended on October 12, 2023, see note 14. 13. Stock Options There were no stock options granted during the nine-months ended September 30, 2023. In September 2022, the board granted 165,000 stock options to officers, board members, and employees. These options vested immediately and are exercisable at $ 5.25 for 3 years. Total stock-based compensation recognized on these options was $ 505,476 and was recognized in management, professional services, and general administrative expenses in the statement of operations. In September 2022, the board granted an additional 15,000 total stock options, 7,500 each to our independent board members. These options vested immediately and are exercisable at $ 4.75 for 3 years. Total stock-based compensation recognized on these options was $ 41,799 and was recognized in management expenses in the statement of operations. 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 ( 116,078 ) $ 4.31 Expired ( 7,143 ) $ 1.96 Forfeited ( 28,001 ) $ 5.56 Balance December 31, 2022 535,953 $ 5.47 Forfeited ( 58,504 ) $ 5.47 Outstanding and exercisable at September 30, 2023 477,449 $ 5.47 At September 30, 2023, outstanding stock options have a weighted average remaining term of approximately 1.07 years and have an intrinsic value of $ 4,350 . There were no stock options exercised during the first nine months of 2023 14. Subsequent Events On October 12, 2023, IDR amended and restated warrants issued in private placements completed in October and November of 2021. The amended and restated warrants extended the exercise period of the warrants for an additional one year. The October 2021 private placement issued warrants gave the holders the right to purchase a total of 235,722 shares of common stock at an exercise price of $ 5.60 per share. The expiration date of the warrants was extended from October 15, 2023 to October 15, 2024. The November 2021 private placement issued warrants gave the holders the right to purchase a total of 53,572 shares of common stock at an exercise price of $ 7 .00 per share. The expiration date of the warrants was extended from November 12, 2023 to November 12, 2024. There were no other changes in the terms of the warrants. 12 Table of Contents