Forward-Looking Statements

All statements in this report other than statements of historical fact are "forward-looking statements". Such forward-looking statements include, but are not limited to, those relating to the following: our ability to secure necessary financing; fluctuations in interest rates; our ability to continue to grow and implement growth strategies, and future cash needs and operations and our business plans.

When used in this document, the words "anticipate," "estimate," "expect," "may," "plans," "project," and similar expressions are intended to be among the statements that identify forward-looking statements. Our results may differ significantly from the results discussed in the forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, those relating to costs, delays and difficulties related to our ability to attract and retain skilled managers and other personnel; the intense competition within our industry; the uncertainty of our ability to manage and continue our growth and implement our business strategy; our vulnerability to general economic conditions; accuracy of accounting and other estimates; our future financial and operating results, cash needs and demand for services; and our ability to maintain and comply with permits and licenses; as well as other risk factors described in this Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.





Overview

We were incorporated in the State of Nevada in August, 2012 under the name "Online Yearbook" with the principal business objective of developing and marketing online yearbooks for schools, companies and government agencies.

In November, 2014, Rocky Mountain Resource Holdings, Inc. ("RMRH") became our majority shareholder by acquiring 5,200,000 shares of our common stock (the "Shares"), or 69.06% of the then issued and outstanding shares, pursuant to stock purchase agreements with Messrs. El Maraana and Salah Blal, our former officers and directors. The Shares were acquired for an aggregate purchase price of $357,670.

In December 2014, we changed our name to "RMR Industrials, Inc." in connection with the change in our business plan.

In February, 2015 (the "Closing Date"), we entered into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, OLYB Acquisition Corporation, a Nevada corporation and wholly owned subsidiary of the Company ("Merger Sub") and RMR IP, Inc., a Nevada corporation ("RMR IP"). In accordance with the terms of Merger Agreement, on the Closing Date, Merger Sub merged with and into RMR IP (the "Merger"), with RMR IP surviving the Merger as our wholly owned subsidiary. Chad Brownstein and Gregory M. Dangler are directors of the Company and co-owners of RMRH, which was the majority shareholder of the Company prior to the Merger. Additionally, Messrs. Brownstein and Dangler were indirect controlling shareholders and directors of RMR IP prior to the Merger. As such, the Merger was among entities under the common control of Messrs. Brownstein and Dangler.

In July, 2016, we formed RMR Aggregates, Inc., a Colorado corporation ("RMR Aggregates"), as our wholly-owned subsidiary. RMR Aggregates was formed to hold assets whose primary focus is the mining and processing of industrial minerals for the manufacturing, construction and agriculture sectors. These minerals include limestone, aggregates, marble, silica, barite and sand.

In October, 2016, pursuant to an Asset Purchase Agreement with CalX Minerals, LLC, a Colorado limited liability company ("CalX"), RMR Aggregates completed the purchase of substantially all of the assets associated with the Mid-Continent Quarry on 41 BLM unpatented placer mining claims in Garfield County, Colorado. CalX assets include the mining claims, improvements, access rights, water rights, equipment, inventory, contracts, permits, certain intellectual property rights, and other tangible and intangible assets associated with the limestone mining operation.





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In January 2018, the Company formed Rail Land Company, LLC ("Rail Land Company") as a wholly-owned subsidiary to acquire and develop a rail terminal and services facility (the "Rail Park"). Rail Land Company purchased an approximately 470-acre parcel of real property located in Bennett, Colorado in February, 2018. In July 2018 we exercised our option to acquire an additional approximately 150 acres for a total of 620 acres. The Company's development of the Rail Park is intended to expand the customer base for our products by utilizing rail freight capabilities to reach customers in the greater Denver area and by expanding our business to include rail transportation solutions and services.

On April 26, 2019, RMR Logistics entered into an asset purchase agreement with H2K, LLC, a Colorado limited liability company ("the Seller") pursuant to which RMR Logistics acquired the Seller's trucking assets.

On January 1, 2020, the Company changed its name from RMR Industrials, Inc. to Rocky Mountain Industrials, Inc.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that impact the reported amounts of assets, liabilities, and expenses, and disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Although these estimates are based on the Company's knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from those estimated amounts and assumptions used in the preparation of the financial statements.





Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. As of December 31, 2019, the Company views its operations and manages its business as three operating segments, Aggregates mining, Logistics and Rail Park.





Cash and Cash Equivalents

The Company considers all highly liquid securities with original maturities of three months or less at the date of purchase to be cash equivalents. As of March 31, 2020, the Company had cash of $59,040 and no cash equivalents. The Company may occasionally maintain cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation. The amounts are held with major financial institutions and are monitored by management to mitigate credit risk.





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Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Asset impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the asset. Any impairment losses are measured and recorded based on discounted estimated future cash flows and are charged to income on the Company's consolidated statements of operations. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company's estimates of future cash flows are based on numerous assumptions, including expected commodity prices, production levels, capital requirements and estimated salvage values. It is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable material, future commodity prices, production levels and costs and capital are each subject to significant risks and uncertainties. As of March 31, 2020, the Company's mineral resources do not meet the definition of proven or probable reserves or value beyond proven or probable reserves and any potential revenue has been excluded from the cash flow assumptions. Accordingly, recoverability of the long-lived assets' capitalized cost is based primarily on estimated salvage values or alternative future uses.





Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

- Level 1: Quoted market prices in active markets for identical assets or liabilities

- Level 2: Observable market-based inputs or inputs that are corroborated by market data

- Level 3: Unobservable inputs that are not corroborated by market data





Revenue Recognition

As of January 1,2018, we adopted ASU NO. 2014-09, "Revenue from Contracts with Customers" Topic 606. The Company recognizes revenue upon delivery of goods to the customer at which time the Company's performance obligation is satisfied at an amount that the Company expects to be entitled to in exchange for those goods in accordance with the five step analysis outlined in Topic 606: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations, and (v) recognize revenue when (or as) performance obligations are satisfied.

Revenue includes product sales of limestone, aggregate materials and other transportation charges to customers net of discounts, allowance or taxes, as applicable.

Accrued Reclamation Liability

The Company incurs reclamation liabilities as part of its mining activities. Quarry activities require the removal and relocation of significant levels of overburden to access materials of usable quantity and quality. The same overburden material is used to reclaim depleted mine areas, which must be sloped to a certain gradient and seeded to prevent erosion in the future. Reclamation methods and requirements can differ depending on the quarry and state rules and regulations in existence for certain locations. As of March 31, 2020, the Company's undiscounted reclamation obligations totaled approximately $222,081, which is expected to be settled within the next 20 years.

Reclamation costs resulting from the normal use of long-lived assets, either owned or leased, are recognized over the period the asset is in use. The obligation, which cannot be reduced by estimated offsetting cash flows, is recorded at fair value as a liability at the obligating event date and is accreted through charges to operating expenses. The fair value is based on our estimate for a third party to perform the legally required reclamation tasks including a reasonable profit margin. This fair value is also capitalized as part of the carrying amount of the underlying asset and depreciated over the estimated useful life of the asset.





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The mining reclamation reserve is based on management's estimate of future cost requirements to reclaim property at its operating quarry site. Costs are estimated in current dollars and inflated until the expected time of payment using a future estimated inflation rate and then discounted back to present value using a credit-adjusted, risk-free rate on obligations of similar maturity adjusted to reflect our credit rating. The Company will review reclamation liabilities at least every three years for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation liabilities are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. Examples of events that would trigger a change in the cost include a new reclamation law or amendment to an existing mineral lease. Examples of events that would cause a change in the estimated settlement date include the acquisition of additional reserves or early or delayed closure of a site. Any affect to earnings from cost revisions is included in cost of revenue.





Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period, without consideration of the potentially dilutive effects of converting stock options or restricted stock purchase rights outstanding. Diluted net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period and the potential dilutive effects of stock options or restricted stock purchase rights outstanding during the period determined using the treasury stock method. There are no such anti-dilutive common share equivalents outstanding as March 31, 2020 which were excluded from the calculation of diluted loss per common share.





Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax bases of the Company's assets and liabilities and their financial statement reported amounts. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

A valuation allowance is recorded by the Company when it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

Additionally, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly, the Company establishes reserves for uncertain tax positions. The Company has not recognized interest or penalties in its statement of operations and comprehensive loss since inception.





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Recent Accounting Pronouncements

Refer to Note B - Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements (Part IV, Item 15 of this Form 10-K) for further discussion.

Results of Operations for the Fiscal Year Ended March 31, 2020 compared to the Fiscal Year Ended March 31, 2019





                                         For the          For the
                                       year ended        year ended
                                       March 31,         March 31,
                                          2020              2019
Revenue                               $   2,090,791     $  1,430,338
Cost of goods sold                        1,878,156        1,304,256
Gross profit                                212,635          126,082

Selling, general and administrative 12,337,492 8,835,445 Loss from operations

                    (12,124,857 )     (8,709,363 )
Loss on sale of assets                     (60,176)                -
Other income                                      -        1,000,000
Interest expense, net                      (368,212 )       (516,036 )
Loss before income tax provision        (12,552,384 )     (8,225,399 )
Income tax expense                              861         (11,087)
Net loss                                (12,552,384 )     (8,214,312 )




Revenues

Revenues for the year ended March 31, 2020 were, 2,090,791, compared to sales of $1,430,338 for the same period in the prior year. The increase of $660,453 was due to an increase in trucking sales.





Cost of Goods Sold

Cost of goods sold for the year ended March 31, 2020, was $ 1,878,156, compared to $1,304,256 for the year ended March 31, 2019.The increase in cost of goods sold is largely due to the increase in labor, repairs and fuel.

Selling, general and administrative

Operating expenses for the year ended March 31, 2020 were $12,337,492, compared to operating expenses for the year ended March 31, 2019 of $8,835,445. Selling, general and administrative expenses consisted of overhead costs related to mining operations, consulting services from related parties, public company costs and amortization of intangible assets. The main increases consist of $1,400,000 increase in legal fees, including legal fees relating to the Company's mine expansion project and the development of the Company's Rail Park project. Salaries and wages increased $750,000 due to the Company increasing staffing largely in relation to the Company's Rail Park project.





Other income

The Other income in fiscal 2019 is related to $1,000,000 in income received on the sale of an easement on the Company's Rail Park property.





Interest expense, net

Interest decreased as a result of the extinguishment of debt and repayment of notes payable during the year.





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Liquidity and Capital Resources

As of March 31, 2020, we had current assets of $800,480, total current liabilities of $6,492,172 and working capital deficit of $5,691,692. We have incurred an accumulated loss of $48,572,143 since inception. Our independent auditors have issued an audit opinion for our financial statements for the year ended March 31, 2020 which includes a statement expressing substantial doubt as to our ability to continue as a going concern due to our limited liquidity and our lack of revenues.

We do not generate adequate cash flows to support our existing operations. Moreover, the historical and existing capital structure is not adequate to fund our planned growth. Our current cash requirements are significant due to our business plan, which contemplates future acquisitions, development of the Company's Rail Park asset and expansion of the Company's mining operations. We anticipate generating losses through fiscal 2020 and into fiscal 2021. We anticipate that we will be able to raise sufficient amounts of working capital in the near term through debt or equity offerings as may be required to meet short-term obligations, although this cannot be guaranteed. In addition, our Rail Park project is currently under construction and fully platted and entitled, giving us the ability to sell land enhancing our own internal revenue generating platform. In January 2021, we sold an 83-acre lot for $9.1 million.



.

Other than as stated above, we currently do not have any arrangements for additional financing, and we may not be able to obtain financing when required. Our future prospects are dependent upon our ability to obtain financing, a successful marketing and promotion program and, further in the future, achieving a profitable level of operations. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. We will require additional funds to achieve and maintain compliance with SEC reporting obligations and to remain in good standing with the state of Nevada. There are no assurances that we will be able to raise the required working capital on favorable terms, in a timely manner or at all. Any failure to secure additional financing may force us to modify our business plan. In addition, we cannot be assured of profitability in the future.





Going Concern

We have incurred net losses since our inception on October 15, 2014 through March 31, 2020 totaling $48,572,143 and have completed the preliminary stages of our business plan. We anticipate incurring additional losses and will depend on additional financing in order to meet our continuing obligations and ultimately to attain profitability. Our ability to obtain additional financing, whether through the issuance of additional equity or through the assumption of debt, is uncertain. Accordingly, our independent auditors' report on our financial statements for the fiscal year ended March 31, 2020 includes an explanatory paragraph regarding concerns about our ability to continue as a going concern, including additional information contained in the notes to our financial statements describing the circumstances leading to this disclosure. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business.

The Company is currently working through a number of opportunities to ensure the business will continue as a going concern. These include:

1. Rail Park FDP and Final Plat were unanimously approved by the Adams County

Board of County Commissioners on September 1, 2020, paving the way for lot
    sales and construction.  On January 14th, 2021, we sold an 83-acre lot to a
    Fortune 500 company. This user was the first of twelve available lots in the
    property. Lot sales will be a primary revenue driver for us with significant
    interest from many potential light and heavy industrial tenants. Construction
    will begin in April 2020 and will follow a phased approach from the south
    parcels to the rail served north parcels.

2. Construction commencement will include certain public infrastructure costs


    that will be reimbursed through the establishment of the Rocky Mountain Rail
    Park Metropolitan District.  Reimbursement will be phased as specific
    infrastructure components are completed and worked through the process.. The
    RMRP Metro District bond offering closed on April 15th, 2021 raising total
    proceeds of $65,209,784, of which, $51,234,881 (project fund) will be directly
    used for public infrastructure construction at the Rail Park.

3. Potential expansion of the Mid-Continent Quarry, following the proper BLM


    process will allow for increased production volumes. Current operations are
    additionally being enhanced to provide for short term revenue and operational
    sustainability.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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