ROCKY MOUNTAIN INDUSTRIALS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion includes forward-looking statements for the purposes of WE federal securities laws. See “Caution Regarding Forward-Looking Statements”.

Insight

We have been incorporated into the state of nevada in August 2012 under the name “Online Yearbook” with the main business objective of developing and marketing online yearbooks for schools, businesses and government agencies.

In November 2014, Rocky Mountain Resource Holdings, Inc. (“RMRH”) became our controlling shareholder by acquiring 5,200,000 shares of our common stock (the “Shares”), representing 69.06% of the then issued and outstanding shares, pursuant to share purchase agreements with MM. El Maraana and Salah Blal, our former officers and administrators. The shares were acquired for a total purchase price of $357,670.

In December 2014we changed our name to “RMR Industrials, Inc.” and on January 1, 2020the Company changed its name from RMR Industrials, Inc. at Rocky Mountain Industrials, Inc.

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

In October 2016under an asset purchase agreement with CalX Minerals, LLCa Colorado limited liability company (“CalX”), RMR Aggregates has completed the purchase of substantially all of the assets associated with the Mid-Continent Quarry on 41 unpatented placer mining claims from BLM in Garfield County, Colorado. CalX assets include mining claims, betterments, access rights, water rights, equipment, inventory, contracts, permits, certain intellectual property rights and other tangible and intangible assets associated with limestone mining.

In January 2018the Company has established Rail Land Company, LLC (“Terrestrial Railway Company“) as a wholly owned subsidiary to acquire and develop a rail terminal and service facility (the “Railway fleet“). Rail Land Company purchased a parcel of land of approximately 470 acres located at Bennett, Colorado in February 2018.

In July 2018 we exercised our option to acquire approximately 150 additional acres for a total of approximately 620 acres. The Company’s development of
Railway fleet is intended to expand the customer base for our products by using rail freight capabilities to reach customers in the largest denver and expanding our business to include rail transportation solutions and services.

Operating results

Comparison of three and six months Completed September 30, 2022 and September 30, 2021

Revenue

Our income for the three and six month periods ended September 30, 2022
has been $288,431 and $471,581. This compares to revenues for the same periods ended
September 30, 2021 of $381,882 and $781,794. The decline in revenue for the three and six month periods ended September 30, 2022is the result of a drop in demand from the Company’s main customer.

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Cost of Goods Sold

Our cost of goods sold for the three and six month periods ended September 30, 2022 has been $296,434 and $571,145. This compares to the cost of goods sold for the same periods ended September 30, 2021 of $370,960 and $655,853. The decline in cost of goods sold for the three-month and six-month periods ended September 30, 2022 is usually the result of declining income.

Selling, general and administrative expenses

Our selling, general and administrative expenses for the three-month and six-month periods ended September 30, 2022 were $1,699,766 and $4,094,096. This compares to operating expenses for the same closed periods September 30, 2021 of
$3,113,199 and $5,923,648. Selling, general and administrative expenses included general payroll and related benefits, related party advisory services, public company costs, and depreciation and amortization. The decrease is primarily related to the Company’s management of selling, general and administrative expenses as we continue to operate at a development stage.

Interest expense, net

Our interest expense, net for the three-month and six-month periods ended
September 30, 2022 were $210,477 and $417,452compared to $156,408 and $319,517
interest charges for the same closed periods September 30, 2021.

Net income/(loss)

Our net loss for the three and six month periods ended September 30, 2022
has been $1,918,246 and $4,617,021. This compares to the net income for the three month period of $1,939,606 and a net loss for the six-month period ended September 30, 2021 of $480,433.

Cash and capital resources

From September 30, 2022we had current assets of $5,961,908total current liabilities of $7,713,054 and insufficient working capital of $1,751,146. We suffered a cumulative loss of $68,699,601 since its creation.

In past years, the Company has financed its operations using cash proceeds received from the issuance of common and preferred shares and proceeds from debt financing. However, several significant transactions have taken place over the last 12 months which have had a positive impact on the Company’s net financial position and have strengthened its financial position and its ability to meet its future obligations over the next 12 months. without the need to raise additional funds as it has traditionally been required to do so. These include:

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

1. Board of County Commissioners on September 1, 2020paving the way for many

    sales and construction.


    On January 14, 2021, the Company sold an 83-acre lot to a Fortune 500 company
    for a gross sales price of $9.1M. This purchase was the first of twelve

2. batches available in the Railway fleet. Lot sales will be a main source of cash

    inflows for the Company with significant interest from many potential light
    and heavy industrial tenants.


    The RMRP Metro District bond offering closed on April 15, 2021, raising total
    proceeds of approximately $65.2M.  These bond proceeds will fund the public

3. the infrastructure costs of the Railway fleet. Total rail fleet the cost of the project was

    budgeted at between $60M and $75M of which approximately 75% is considered
    public infrastructure and therefore not an obligation of the Company. The
    Company is responsible for the remaining approximately 25%.


    Construction on the south parcels of the Rail Park (approximately 150 acres)

4. started in April 2021. The Company has set up a construction credit facility for

$12 million to finance part of the construction costs (i.e. those not financed with

Metro district bond product).


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To date, the Company has received approximately $2 million as reimbursement of

5. “pre-construction” costs that were incurred prior to the closing of the Bond

Offering in April.

6. In September 2021the Company sold its underlying water rights Railway fleet,

to Metro district during about $5.9M.

In May 2022the Company entered into a construction loan facility of $21M and one

7. working capital facility of $2 million to provide its developer part with

the infrastructure costs of the Railway fleet.

Recently issued accounting pronouncements

We do not expect the adoption of the recently issued accounting pronouncements to have a material impact on our net results of operations, financial condition or cash flows.

Off-balance sheet arrangements

We have no off-balance sheet arrangements.

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