Inter Rock Minerals : Financial Statements 2024 Q1

Consolidated Financial Statements

Expressed in United States dollars

For the three months ended March 31, 2024

NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by, and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these financial statements.

INTER-ROCK MINERALS INC.

May 16, 2024

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Inter-Rock Minerals Inc.

Condensed Consolidated Interim Balance Sheets

As at

(Expressed in thousands of United States Dollars)

		March 31,	December 31,
UNAUDITED	Note	2024	2023
		$	$
ASSETS
Current assets
Cash		5,251	4,603
Accounts receivable		10,796	13,216
Inventories	7	2,021	1,904
Prepaid expenses and other assets		966	1,131
Total Current Assets		19,034	20,854
Non-current assets
Investment	5	618	543
Properties, plant and equipment	8	4,090	3,615
Intangible assets	9	643	724
Goodwill	9	1,808	1,808
Total Assets		26,193	27,544
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities		9,254	11,520
Current portion of long term debt	10	478	221
Current portion of lease obligations	11	264	294
Total Current Liabilities		9,996	12,035
Non-current liabilities
Long-term debt	10	564	292
Lease obligations	11	513	569
Asset retirement obligation	12	33	33
Deferred tax liability		454	454
Series A preferred shares	13	3,417	3,417
Total Liabilities		14,977	16,800
Equity
Share capital	14	5,616	5,621
Contributed surplus		315	315
Retained earnings		5,285	4,808
Total Equity		11,216	10,744
Total Liabilities and Equity		26,193	27,544

Financial Commitments (Note 19)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

2

Inter-Rock Minerals Inc.

Condensed Consolidated Interim Statements of Net and Comprehensive Income For the three months ended

(Expressed in thousands of United States Dollars except for outstanding shares and per share amounts)

		March 31,	March 31,
UNAUDITED	Note	2024	2023
		$	$
REVENUE	6	27,305	22,058
COST OF SALES
Operating costs	6	24,210	19,252
GROSS PROFIT		3,095	2,806
OPERATING EXPENSES
Selling, general and administrative	6	2,249	1,691
Amortization and depletion	8	161	162
Amortization of intangible assets	9	81	81
INCOME BEFORE FINANCING COSTS		604	872
FINANCING COSTS
Interest on debt and lease obligations	10,11	27	15
INCOME BEFORE INCOME TAXES		577	857
INCOME TAXES
Current	16	100	200
		100
NET INCOME AND COMPREHENSIVE INCOME		477	657
Basic income per share	15	0.02	0.03
Diluted income per share	15	0.01	0.02
Weighted average number of shares outstanding
Basic		21,961,811	22,303,311
Diluted		39,098,791	39,440,291

The accompanying notes are an integral part of these condensed consolidated interim financial statements

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Inter-Rock Minerals Inc.

Condensed Consolidated Interim Statements of Changes in Equity

As at and for the periods ended March 31, 2024 and 2023

(Expressed in thousands of United States Dollars)

	Share
	Capital	Contributed	Retained
UNAUDITED	(Note 14)	Surplus	Earnings	Total
	$	$	$	$
Balance, December 31, 2022	5,791	315	3,038	9,144
Net income and comprehensive income	-	-	657	657
Balance, March 31, 2023	5,791	315	3,695	9,801
Balance, December 31, 2023	5,621	315	4,808	10,744
Shares purchased for cancellation	(5)	-	-	(5)
Net income and comprehensive income	-	-	477	477
Balance, March 31, 2024	5,616	315	5,285	11,216

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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Inter-Rock Minerals Inc.

Condensed Consolidated Interim Statements of Cash Flows

For the three months ended

(Expressed in thousands of United States Dollars)

		March 31,	March 31,
UNAUDITED	Note	2024	2023
CASH PROVIDED BY (USED IN) OPERATIONS
Net income		477	657
Items not affecting cash
Amortization and depletion		161	162
Amortization of intangible assets		81	81
Interest expense		27	15
		746	915
Net changes in non-cash working capital
Accounts receivable		2,420	907
Inventories		(117)	385
Prepaid expenses		165	(97)
Accounts payable and accrued liabilities		(2,193)	(1,230)
Cash generated by operating activities		1,021	880
INVESTING
Purchase of properties, plant and equipment	8	(636)	(228)
Investment	5	(75)	(542)
Cash used in investing activities		(711)	(770)
FINANCING
Interest paid		(27)	(15)
Interest on Series A preferred shares	14	(73)	-
Proceeds from financing	10	529	-
Repayment of long term debt	10	-	(271)
Repayment of lease obligations	11	(86)	(76)
Shares purchased for cancellation		(5)	-
Cash provided by (used in) financing activities		338	(362)
Net change in cash		648	(252)
Cash, beginning of the period		4,603	3,048
Cash, end of the period		5,251	2,796

The accompanying notes are an integral part of these condensed consolidated interim financial statements

5

Inter-Rock Minerals Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the periods ended March 31, 2024 and 2023

(Expressed in thousands of United States Dollars except for per share information)

1. CORPORATE INFORMATION

Inter-Rock Minerals Inc. ("Inter-Rock" or the "Company") is domiciled in Canada and is continued under the Business Corporations Act (Ontario). The Company's office is located at 2 Toronto Street, Suite 500 Toronto, Ontario, M5C 2B6, Canada. The Company's shares are traded on the TSX Venture Exchange under the symbol "IRO".

Inter-Rock owns two operating businesses: Papillon Agricultural Company Inc. ("Papillon") and MIN-AD, Inc. ("MIN-AD"). Papillon is a U.S. based marketer and distributor of toll manufactured premium dairy feed nutritional supplements, including MIN-AD's products. MIN-AD is engaged in the production and marketing of high purity dolomite and clay, primarily to the animal feed industry in the United States.

2. BASIS OF PRESENTATION

2.1 Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with the IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The condensed consolidated interim financial statements should be read in conjunction with the Company's audited annual consolidated financial statements for the year ended December 31, 2023 prepared in accordance with IAS as issued by the International Accounting Standards Board ("IASB").

2.2 Basis of measurement

The condensed consolidated interim financial statements have been prepared on the historical cost basis except for certain financial instruments, which are measured at fair value, as explained in the accounting policies set out in Note 3 of the Company's audited financial statements for the year ended December 31, 2023.

2.3 Basis of consolidation

The condensed consolidated interim financial statements include the accounts of the Company and the following wholly-owned subsidiaries:

Name of subsidiary	Country of Incorporation	Ownership
Secret Pass Gold, Inc.	United States	100%
MIN-AD, Inc.	United States	100%
Papillon Agricultural Company, Inc.	United States	100%

2.4 Functional currency and currency of presentation

These condensed consolidated interim financial statements are presented in United States dollars, which is the functional currency of the Company and all its subsidiaries. Transactions denominated in currencies other than the functional currency are recorded in the functional currency using the spot rate on the transaction date, and revalued using the exchange rate in effect at the end of each reporting date. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the reporting date. Non-monetary assets and liabilities are translated at the historical rate. Exchange gains and losses are included in the condensed consolidated interim statements of income and comprehensive income for the period.

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Inter-Rock Minerals Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the periods ended March 31, 2024 and 2023

(Expressed in thousands of United States Dollars except for per share information)

3. MATERIAL ACCOUNTING POLICIES

The condensed consolidated interim financial statements reflect the accounting policies applied by the Company in its audited financial statements for the year ended December 31, 2023. The Company's material accounting policies are presented in Note 3 in the audited consolidated financial statements for the year ended December 31, 2023.

4. CRITICAL JUDGMENTS AND ESTIMATES

The preparation of the Company's condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated interim financial statements and reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are continually evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual results could differ from these estimates.

These condensed consolidated interim financial statements reflect the judgements and estimates outlined by the Company in Note 4 of its audited consolidated financial statements for the year ended December 31, 2023.

5. INVESTMENT

In February 2023, the Company provided a convertible loan to a private Swiss company ("Embion") in the amount of CHF 500,000. Embion is a start-up company developing a novel catalytic process to break down waste biomass, such as brewer's grains. The process can be adapted to convert certain carbohydrates that can be utilized by bacteria in the gastrointestinal tracts of animals.

The convertible loan is non-interest bearing and has a maturity date of February 28, 2025. The loan will automatically convert to shares of Embion at the earlier of the maturity date and the completion by Embion of a financing of a minimum of CHF 1,500,000. The conversion rate will be based on the lower of (a) a 50% discount from the pre-money valuation of Embion in the financing and (b) CHF 5.59 per share.

Due to the fact that the convertible loan automatically converts to equity, the instrument is valued as an equity investment in shares of Embion. The value of the investment is adjusted for inputs at the valuation date based on the most recent financing round economics, if applicable.

In January 2024, the Company made an additional non-interest bearing loan of CHF 65,000. The second tranche was provided under the same terms and conditions as the original loan.

7

Inter-Rock Minerals Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the periods ended March 31, 2024 and 2023

(Expressed in thousands of United States Dollars except for per share information)

6. SUBSIDIARIES AND BUSINESS SEGMENTS

Inter-Rock has two operating businesses. Each business is an operating segment for financial reporting purposes. Certain costs are managed on a consolidated basis and are therefore not reflected in segment income. Operating segments of the Company are as follows:

Name of subsidiary	Country of Incorporation	Ownership
MIN-AD, Inc.	United States	100%
Papillon Agricultural Company, Inc.	United States	100%

The Company's management evaluates the performance of these segments and allocates resources to them based on certain performance measures.

Segment earnings correspond to each business' earnings from operations. The Company's management reporting system evaluates performance based on a number of factors; however, the primary profitability measure is the earnings from operations before depreciation, amortization, net financing income or expense and income taxes ("EBITDA").

Segment operating results are as follows:

Period ended March 31, 2024	MIN-AD	Papillon	Other	Eliminations	Total
REVENUE
Internal sales	1,061	41	240	(1,342)	-
External sales	1,034	26,271	-	-	27,305
COST OF SALES
Operating costs	1,543	23,728	-	(1,061)	24,210
GROSS PROFIT	552	2,584	240	(281)	3,095
OPERATING EXPENSES
Selling, general & administration	465	1,642	423	(281)	2,249
Amortization and depletion	102	15	44	-	161
Amortization of intangible assets	-	81	-	-	81
INCOME (LOSS) BEFORE FINANCING COSTS	(15)	846	(227)	-	604
FINANCING COSTS
Interest on debt and lease obligations	19	5	3	-	27
INCOME (LOSS) BEFORE INCOME TAXES	(34)	841	(230)	-	577
INCOME TAXES
Current	-	100	-	-	100
Deferred	-	-	-	-	-
NET AND COMPREHENSIVE INCOME
(LOSS)	(34)	741	(230)	-	477

8

Inter-Rock Minerals Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the periods ended March 31, 2024 and 2023

(Expressed in thousands of United States Dollars except for per share information)

6. SUBSIDIARIES AND BUSINESS SEGMENTS (CONT'D)

As at March 31, 2024	MIN-AD Papillon	Other	Eliminations	Total
ASSETS
Current assets	1,626	17,485	128	(205)	19,034
Non-current assets	3,495	3,428	236	-	7,159
	5,121	20,913	364	(205)	26,193
LIABILITIES
Current liabilities	1,594	8,427	180	(205)	9,996
Non-current liabilities	704	290	3,987	-	4,981
	2,298	8,717	4,167	(205)	14,977

Adjustments and eliminations include inter-segment revenues and expenses which are eliminated on consolidation

Segment balances for the prior period are as follows:

Period ended March 31, 2023	MIN-AD	Papillon	Other	Eliminations	Total
REVENUE
Internal sales	1,281	82	180	(1,543)	-
External sales	1,294	20,764	-	-	22,058
COST OF SALES
Operating costs	2,045	18,488	-	(1,281)	19,252
GROSS PROFIT	530	2,358	180	(262)	2,806
OPERATING EXPENSES
Selling, general & administration	408	1,431	113	(261)	1,691
Amortization and depletion	102	15	45	-	162
Amortization of intangible assets	-	81	-	-	81
INCOME BEFORE FINANCING COSTS	20	831	22	(1)	872
FINANCING COSTS
Interest on debt and lease obligations	5	8	3	(1)	15
INCOME BEFORE INCOME TAXES	15	823	19	-	857
INCOME TAXES
Current	-	200	-	-	200
NET AND COMPREHENSIVE INCOME	15	623	19	-	657

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