Idaho Strategic Resources, Inc. 10-Q

ITEM 1: Financial Statements Idaho Strategic Resources, Inc. Condensed Consolidated Balance Sheets (Unaudited) March 31, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 5,295,457 $ 2,286,999 Gold sales receivable 1,238,474 1,038,867 Inventories 796,836 876,681 Joint venture receivable 1,598 2,080 Investment in equity securities - 5,649 Other current assets 209,824 236,837 Total current assets 7,542,189 4,447,113 Property, plant and equipment, net of accumulated depreciation 10,665,673 10,233,640 Mineral properties, net of accumulated amortization 9,088,070 7,898,878 Investment in Buckskin Gold and Silver, Inc 340,636 338,769 Investment in joint venture 435,000 435,000 Reclamation bond 251,310 251,310 Deposits 377,420 285,079 Total assets $ 28,700,298 $ 23,889,789 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued expenses $ 485,363 $ 484,221 Accrued payroll and related payroll expenses 272,476 266,670 Notes payable, current portion 1,090,329 978,246 Total current liabilities 1,848,168 1,729,137 Asset retirement obligations 291,223 286,648 Notes payable, long term 2,167,060 1,338,406 Total long-term liabilities 2,458,283 1,625,054 Total liabilities 4,306,451 3,354,191 Commitments - - 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, 2024- 12,683,037 and December 31, 2023- 12,397,615 shares issued and outstanding 36,664,576 34,963,739 Accumulated deficit ( 15,039,529 ) ( 17,210,638 ) Total Idaho Strategic Resources, Inc stockholders’ equity 21,625,047 17,753,101 Non-controlling interest 2,768,800 2,782,497 Total stockholders' equity 24,393,847 20,535,598 Total liabilities and stockholders’ equity $ 28,700,298 $ 23,889,789 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, 2024 and 2023 March 31, 2024 2023 Revenue: Sales of products $ 5,898,938 $ 3,341,596 Total revenue 5,898,938 3,341,596 Costs of Sales: Cost of sales and other direct production costs 2,558,913 2,147,960 Depreciation and amortization 501,788 328,037 Total costs of sales 3,060,701 2,475,997 Gross profit 2,838,237 865,599 Other operating expenses: Exploration 267,848 273,442 Management 109,100 68,911 Professional services 154,244 240,805 General and administrative 160,663 263,298 Loss on disposal of equipment 4,409 6,120 Total other operating expenses 696,264 852,576 Operating income 2,141,973 13,023 Other (income) expense: Equity income on investment in Buckskin Gold and Silver, Inc ( 1,867 ) ( 350 ) Timber revenue net of costs ( 13,357 ) ( 20,724 ) (Gain) loss on investment in equity securities 453 ( 5 ) Interest income ( 19,635 ) ( 18,932 ) Interest expense 20,565 8,848 Total other (income) expense ( 13,841 ) ( 31,163 ) Net income 2,155,814 44,186 Net loss attributable to non-controlling interest ( 15,295 ) ( 16,413 ) Net income attributable to Idaho Strategic Resources, Inc $ 2,171,109 $ 60,599 Net income per common share-basic $ 0.17 $ 0.01 Weighted average common share outstanding-basic 12,513,374 12,200,857 Net income per common share-diluted $ 0.17 $ 0.01 Weighted average common shares outstanding-diluted 12,673,172 12,205,567 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, 2024 and 2023 Common Stock Shares Common Stock Amount Accumulated Deficit Attributable to Idaho Strategic Resources, Inc Non-Controlling Interest Stockholders’ Equity 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 Balance January 1, 2024 12,397,615 $ 34,963,739 $ ( 17,210,638 ) $ 2,782,497 $ 20,535,598 Contribution from non-controlling interest in New Jersey Mill Joint Venture - - - 1,598 1,598 Issuance of common stock for cash, net of offering costs 127,152 847,492 - - 847,492 Issuance of common stock for warrants exercised 147,026 823,346 - - 823,346 Issuance of common stock for stock options exercise 5,357 29,999 - - 29,999 Issuance of common stock for cashless stock options exercise 5,887 - - - - Net income (loss) - - 2,171,109 ( 15,295 ) 2,155,814 Balance March 31, 2024 12,683,037 $ 36,664,576 $ ( 15,039,529 ) $ 2,768,800 $ 24,393,847 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, 2024 and 2023 March 31, 2024 2023 Cash flows from operating activities: Net income $ 2,155,814 $ 44,186 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 501,788 328,037 Loss on disposal of equipment 4,409 6,120 Accretion of asset retirement obligation 4,575 3,899 Loss on investment in equity securities 453 - Equity income on investment in Buckskin Gold and Silver, Inc ( 1,867 ) ( 350 ) Change in operating assets and liabilities: Gold sales receivable ( 199,607 ) ( 432,393 ) Inventories 79,845 72,669 Joint venture receivable 482 ( 1,601 ) Other current assets 27,013 11,856 Accounts payable and accrued expenses 1,142 64,565 Accrued payroll and related payroll expenses 5,806 63,774 Net cash provided by operating activities 2,579,853 160,762 Cash flows from investing activities: Purchases of property, plant, and equipment ( 322,596 ) ( 129,249 ) Deposits on equipment ( 123,060 ) - Proceeds from sale of equipment - 8,500 Additions to mineral property ( 564,355 ) ( 284,272 ) Proceeds from sale of investment in equity securities 5,196 - Investment in equity securities - ( 11,100 ) Net cash used by investing activities ( 1,004,815 ) ( 416,121 ) Cash flows from financing activities: Proceeds from sale of common stock, net of issuance cost 847,492 878,503 Proceeds from issuance of common stock for warrants exercised 823,346 - Proceeds from issuance of common stock for stock options exercised 29,999 - Principal payments on notes payable ( 269,015 ) ( 238,354 ) Principal payments on notes payable, related parties - ( 10,618 ) Contributions from non-controlling interest 1,598 1,601 Net cash provided by financing activities 1,433,420 631,132 Net change in cash and cash equivalents 3,008,458 375,773 Cash and cash equivalents, beginning of period 2,286,999 1,638,031 Cash and cash equivalents, end of period $ 5,295,457 $ 2,013,804 Non-cash investing and financing activities: Deposit on equipment applied to purchase $ 30,719 $ 42,610 Notes payable for equipment purchase $ 559,752 - Notes payable for mineral property purchase $ 650,000 - 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”, “Idaho Strategic” or 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-month periods ended March 31, 2024, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024. 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, 2023, in the Company’s Form 10-K as filed with the Securities and Exchange Commission on March 25, 2024. 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, raises, and related 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 December 31, 2023, the Company had equity securities measured at fair value using level 1 quoted prices and no liabilities required measurement at fair value. At March 31, 2024, 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 (“JV”) and Equity Method Investments Investment in JVs -For JVs where the Company holds more than 50% of the voting interest and has significant influence, the JV 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 JVs in which the Company does not have joint control or significant influence, the cost method is used. For those JVs 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 JVs and its investments therein are adjusted by a similar amount. The Company periodically assesses its investments in JVs 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, 2024, and December 31, 2023, the Company's 37 % common stock holding of Buckskin Gold and Silver, Inc. (“Buckskin”) is accounted for using the equity method (Note 10). At March 31, 2024 and December 31, 2023, the Company’s percentage ownership and method of accounting for each JV and equity method investment is as follows: March 31, 2024 December 31, 2023 JV/Equity % Ownership Significant Influence? Accounting Method % Ownership Significant Influence? Accounting Method NJMJV 65 % Yes Consolidated 65 % Yes Consolidated Butte Highlands JV, LLC 50 % No Cost 50 % No Cost Buckskin 37 % Yes Equity 37 % Yes Equity Reclassifications Certain prior period amounts have been reclassified to conform to the 2024 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 In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, which clarifies the business combination accounting for joint venture formations. The amendments in the ASU seek to reduce diversity in practice that has resulted from a lack of authoritative guidance regarding the accounting for the formation of joint ventures in separate financial statements. The amendments also seek to clarify the initial measurement of joint venture net assets, including businesses contributed to a joint venture. The guidance is applicable to all entities involved in the formation of a joint venture. The amendments are effective for all joint venture formations with a formation date on or after January 1, 2025. Early adoption and retrospective application of the amendments are permitted. We do not expect adoption of the new guidance to have a material impact on our consolidated financial statements and disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, amending reportable segment disclosure requirements to include disclosure of incremental segment information on an annual and interim basis. Among the disclosure enhancements are new disclosures regarding significant segment expenses that are regularly provided to the chief operating decision-maker and included within each reported measure of segment profit or loss, as well as other segment items bridging segment revenue to each reported measure of segment profit or loss. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, and are applied retrospectively. Early adoption is permitted. We are currently evaluating the impact of this update on our consolidated financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, amending income tax disclosure requirements for the effective tax rate reconciliation and income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024 and are applied prospectively. Early adoption and retrospective application of the amendments are permitted. We are currently evaluating the impact of this update on our consolidated financial statements and disclosures. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements. 2. Going Concern The Company is currently producing profitably from underground mining 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 profitable 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. 8 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 3. Inventories At March 31, 2024 and December 31, 2023, the Company’s inventories consisted of the following: March 31, 2024 December 31, 2023 Concentrate inventory In process $ 110,526 $ 28,778 Finished goods 31,784 239,361 Total concentrate inventory 142,310 268,139 Supplies inventory Mine parts and supplies 440,881 374,456 Mill parts and supplies 137,961 158,402 Core drilling supplies and materials 75,684 75,684 Total supplies inventory 654,526 608,542 Total $ 796,836 $ 876,681 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 March 31, 2024, metals that had been sold but not finally settled included 5,737 ounces of which 4,421 ounces were sold at a predetermined price with the remaining 1,316 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, 2024 and 2023 were as follows: March 31, 2024 2023 Gold $ 6,121,129 $ 3,484,034 Silver 24,245 9,522 Less: Smelter and refining charges ( 246,436 ) ( 151,960 ) Total $ 5,898,938 $ 3,341,596 Sales by significant product type for the three-month periods ended March 31, 2024, and 2023 were as follows: March 31, 2024 2023 Concentrate sales to H&H Metal $ 5,898,938 $ 3,203,491 Dore sales to refinery - 138,105 Total $ 5,898,938 $ 3,341,596 At March 31, 2024 and December 31, 2023, our gold sales receivable balance related to contracts with customers of $ 1,238,474 and $ 1,038,867 , respectively, consist only of amounts due from H&H Metals. There is no allowance for doubtful accounts. 5. Related Party Transactions At March 31, 2024 and December 31, 2023, there were no notes payable to related parties. On May 10, 2023, the Company paid the remaining amount due to Ophir Holdings, a company owned by two officers and one former officer of the Company. Prior to this payment, there was a related party interest expense of $ 715 during the three-month period ended March 31, 2023 associated with this note. The Company leases office space from certain related parties on a month-to-month basis. $ 2,000 per month is paid to NP Depot LLC, a company owned by the Company’s president, John Swallow and approximately $ 1,700 is paid quarterly to Mine Systems Design Inc 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-months ended March 31, 2024 and 2023 are as follows: March 31, 2024 2023 $ 7,620 $ 6,395 6. JV Arrangements NJMJV Agreement The Company owns 65% of the NJMJV and has significant influence in its operations . Thus, the JV is included in the consolidated financial statements along with presentation of the non-controlling interest. At March 31, 2024 and December 31, 2023, an account receivable existed with Crescent Silver, LLC (“Crescent”), the other JV participant, for $ 1,598 and $ 2,080 , respectively, for shared operating costs as defined in the JV agreement. Butte Highlands JV, LLC 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 JV. 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 JV’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 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 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 per share for each period as follows: March 31, 2024 March 31, 2023 Three-Months Three-Months Incremental shares included in diluted net income per share Stock options 109,243 4,710 Stock purchase warrants 50,555 - 159,798 4,710 Potentially dilutive shares excluded from diluted net income per share as inclusion would have an antidilutive effect: Stock options - 358,953 Stock purchase warrants - 289,294 - 825,247 8. Property, Plant, and Equipment Property, plant and equipment at March 31, 2024 and December 31, 2023 consisted of the following: March 31, 2024 December 31, 2023 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 ( 1,481,546 ) ( 1,430,323 ) Total mill 3,472,876 3,524,099 Building and equipment Buildings 624,657 624,657 Equipment 9,667,536 8,786,492 10,292,193 9,411,149 Less accumulated depreciation ( 3,852,811 ) ( 3,455,023 ) Total building and equipment 6,439,382 5,956,126 Land Bear Creek 266,934 266,934 BOW 230,449 230,449 Gillig 79,137 79,137 Highwater 40,133 40,133 Salmon property 136,762 136,762 Total land 753,415 753,415 Total $ 10,665,673 $ 10,233,640 9. Mineral Properties Mineral properties at March 31, 2024 and December 31, 2023 consisted of the following: March 31, 2024 December 31, 2023 Golden Chest Mineral Property $ 4,210,566 $ 4,191,189 Infrastructure 3,007,937 2,814,164 Total Golden Chest 7,218,503 7,005,353 New Jersey 256,768 256,768 McKinley-Monarch 200,000 200,000 Butte Gulch 1,125,259 124,055 Potosi 150,385 150,385 Park Copper/Gold 78,000 78,000 Eastern Star 250,817 250,817 Less accumulated amortization ( 191,662 ) ( 166,500 ) Total $ 9,088,070 $ 7,898,878 In February 2024 the Company purchased the surface rights and subsequently cancelled the NSR from the previous agreement with the seller for a 169-acre parcel known as Butte Gulch adjacent to the Golden Chest. The Company had already owned the mineral rights to this property. The sale price was $1,001,000 of which $351,000 was paid in cash and the remaining $650,000 is payable to the seller (monthly interest only payments of $2,750 at 5% interest, for three years with a balloon payment of $650,000 at the end of the term) . For the three-month periods ended March 31, 2024 and 2023, interest expense was capitalized in association with the ramp access project at the Golden Chest as follows. March 31, 2024 March 31, 2023 $ 19,377 $ 22,961 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 $ 1,867 and $ 350 for the respective three-month periods ended March 31, 2024 and 2023. The Company makes an annual payment of $ 12,000 to Buckskin per a mineral lease covering 218 acres of patented mining claims. As of March 31, 2024, the Company holds 37 % of Buckskin’s outstanding shares. 10 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 11. Notes Payable At March 31, 2024 and December 31, 2023, notes payable are as follows: March 31, 2024 December 31, 2023 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 $ 294,918 $ 297,230 Butte Gulch vacant mineral property, 5.00 % interest payable monthly through January 2027, monthly interest only payments of $ 2,750 with a balloon payment of $ 650,000 in February 2027 650,000 - Resemin Muki Bolter, 36-month note payable, 7.00 % interest payable monthly through January 2025, monthly payments of $ 14,821 145,118 186,557 Paus 2 yd LHD, 60-month note payable, 4.78 % interest rate payable through September 2024, monthly payments of $ 5,181 35,675 50,672 Paus 2 yd LHD, 60-month note payable, 3.45 % interest rate payable through July 2024, monthly payments of $ 4,847 19,249 33,541 CarryAll transport, 36-month note payable, 4.5 % interest rate payable monthly through February 2024, monthly payments of $ 303 - 604 CarryAll transport, 36-month note payable, 4.5 % interest rate payable monthly through June 2024, monthly payments of $ 627 1,867 3,713 Two CarryAll transports, 36-month note payable, 6.3 % interest rate payable monthly through May 2025, monthly payments of $ 1,515 20,408 24,591 CarryAll transport, 36-month note payable, 6.3 % interest rate payable monthly through June 2025, monthly payments of $ 866 12,466 14,843 Two CarryAll transports, 48-month note payable, 5.9 % interest rate payable monthly through June 2027, monthly payments of $ 1,174 41,566 44,447 CarryAll transport, 48-month note payable, 5.9 % interest rate payable monthly through April 2028, monthly payments of $ 576 24,554 - Sandvik LH203 LHD, 36-month note payable, 4.5 % interest payable monthly through May 2024, monthly payments of $ 10,352 20,588 51,182 Sandvik LH202 LHD, 36-month note payable, 6.9 % interest payable monthly through August 2025, monthly payments of $ 4,933 79,676 92,948 Doosan Compressor, 36-month note payable, 6.99 % interest payable monthly through July 2024, monthly payments of $ 602 2,378 4,126 Komatsu WX04 LHD, 24-month note payable, 8.24 % interest rate payable monthly through April 2026, monthly payments of $ 16,642 367,068 - Caterpillar 306 excavator, 48-month note payable, 4.6 % interest payable monthly through November 2024, monthly payments of $ 1,512 11,886 16,251 Caterpillar R1600 LHD, 48-month note payable, 4.5 % interest rate payable through January 2025, monthly payments of $ 17,125 167,765 216,880 Caterpillar R1600 LHD bucket, 24-month note payable, 2.06 % interest rate payable monthly through April 2026, monthly payments of $ 4,572 107,415 - Caterpillar AD30 underground truck, 40-month note payable, 8.01 % interest rate payable through October 2026, monthly payments of $ 29,656 827,982 899,417 Caterpillar 259D3 skid steer, 36-month note payable, 8.50 % interest rate payable monthly through December 2026, monthly payments of $ 1,836 53,854 58,156 SBA Economic Injury Disaster (“EIDL”) Loan 30 year note payable, 3.75 % interest payable monthly through December 2054, monthly payments of $ 731 158,835 160,123 2022 Dodge Ram, 75-month note payable, 5.99 % interest rate payable monthly through June 2028, monthly payments of $ 1,152 51,763 54,418 2016 Dodge Ram, 75-month note payable, 5.99 % interest rate payable monthly through June 2028, monthly payments of $ 1,190 53,453 56,194 2020 Ford Transit Van, 72-month note payable, 9.24 % interest rate payable monthly through December 2028, monthly payments of $ 1,060 48,739 50,759 2024 Dodge Ram, 60-month note payable, 9.94 % interest rate payable monthly through February 2029, monthly payments of $ 1,293 60,166 - Total notes payable 3,257,389 2,316,652 Due within one year 1,090,329 978,246 Due after one year $ 2,167,060 $ 1,338,406 All notes except the SBA EIDL loan are collateralized by the property or equipment purchased in connection with each note. Future principal payments of notes payable at March 31, 2024 are as follows: 12 months ended March 31, 2025 $ 1,090,329 2026 695,133 2027 966,287 2028 328,681 2029 33,583 2030 3,454 Thereafter 139,922 Total $ 3,257,389 11 Table of Contents Idaho Strategic Resources, Inc Notes to Condensed Consolidated Financial Statements (Unaudited) 12. Stockholders’ Equity Stock Issuance Activity In the first quarter of 2024, the Company issued common stock as follows: · Sold 127,152 shares of common stock at an average price of $ 6.67 per share for $ 847,492 . · Issued 147,026 shares of common stock in exchange for outstanding warrants for $ 823,346 . · Issued 5,357 shares of common stock in exchange for outstanding stock options for $ 29,999 , · Issued 5,887 shares of common stock for outstanding stock options via cashless exercise. 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 . Stock Purchase Warrants Outstanding The activity in stock purchase warrants is as follows: Number of Warrants Exercise Prices Balance December 31, 2022 and 2023 289,294 $ 5.60 - 7.00 Exercised ( 147,026 ) $ 5.60 Balance March 31, 2024 142,268 $ 5.60 - 7.00 These warrants expire as follows: Shares Exercise Price Expiration Date 88,696 $ 5.60 October 15, 2024 53,572 $ 7.00 November 12, 2024 142,268 13. Stock Options There were no stock options granted during the three-months ended March 31, 2024 and 2023. Activity in the Company’s stock options is as follows: Number of Options Weighted Average Exercise Prices Balance December 31, 2022 535,953 $ 5.47 Forfeited ( 58,504 ) $ 5.47 Balance December 31, 2023 477,449 $ 5.47 Exercised ( 22,073 ) $ 5.50 Forfeited ( 10,144 ) $ 5.50 Outstanding and exercisable at March 31, 2024 445,232 $ 5.47 In the first quarter of 2024 16,716 options were exchanged for 5,887 shares in a cashless exercise by employees. Options exercised in the first quarter of 2024 had an intrinsic value of $ 65,229 . At March 31, 2024, outstanding stock options have a weighted average remaining term of approximately 0.85 years and have an intrinsic value of $ 1,332,314 . 14. Subsequent Events Subsequent to March 31, 2024, 29,763 shares of common stock have been issued in exchange for outstanding warrants for net proceeds of $ 166,673 . Additionally, subsequent to March 31, 2024 69,861 options were exchanged for 27,562 shares in a cashless exercise by employees. 12 Table of Contents Forward-Looking Statements Certain statements contained in this Form 10-Q, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk, are intended to be covered by the safe harbor provided for under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Our forward-looking statements include our current expectations and projections about future results, performance, results of litigation, prospects and opportunities, including reserves and other mineralization. We have tried to identify these forward-looking statements by using words such as “may,” “will,” “expect,” “anticipate,” “believe,” “intend,” “feel,” “plan,” “estimate,” “project,” “forecast” and similar expressions. These forward-looking statements are based on information currently available to us and are expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, those set forth under Part I, Item 1A.–Risk Factors in our 2023 Form 10-K and in Part II, Item 1.A.-Risk Factors in this Form 10-Q. Given these risks and uncertainties, readers are cautioned not to place undue reliance on our forward-looking statements. All subsequent written and oral forward-looking statements attributable to Idaho Strategic or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Except as required by federal securities laws, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.