arec_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 000-55456

American Resources Corporation

(Exact name of registrant as specified in its charter)

Florida		46-3914127
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12115 Visionary Way Fishers, IN 46038

(Address and Zip Code of principal executive offices)

Registrant’s telephone number, including area code: (317) 855-9926

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common, $0.0001 Par Value	AREC	NASDAQ Capital Market
Warrant	ARECW	NASDAQ Capital Market

Indicate by check mark whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting Company. See the definitions of the “large accelerated filer,” “accelerated filer,” and “smaller reporting Company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller Reporting Company	☒
Emerging growth Company	☒

If an emerging growth Company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 14, 2022, the registrant had 68,703,224 shares of Class A common stock issued and outstanding.

AMERICAN RESOURCES CORPORATION

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Interim Consolidated Financial Statements	3

	Consolidated Condensed Balance Sheets as of September 30, 2022 and December 31, 2021 (Unaudited)	4

	Consolidated Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	5

	Consolidated Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Nine Months ended September 30, 2022 and 2021 (unaudited)	6-7

	Consolidated Condensed Statements of Cash Flows for the Nine Months ended September 30, 2022 and 2021 (Unaudited)	8

	Notes to Unaudited Consolidated Condensed Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	31

Item 3.	Defaults upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

SIGNATURES		34

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

AMERICAN RESOURCES CORPORATION

CONSOLIDATED

FINANCIAL STATEMENTS

(UNAUDITED)

For the three months and nine months ended

September 30, 2022

Table of Contents

AMERICAN RESOURCES CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

UNAUDITED

	September 30, 2022			December 31, 2021
ASSETS

CURRENT ASSETS
Cash	$	3,769,465		$	11,492,702
Accounts Receivable		5,671,043			3,175,636
Inventory		730,023			-
Prepaid fees		1,054,342			624,605
Total Current Assets		11,224,873			15,292,943

LONG-TERM ASSETS
Cash - restricted		1,086,971			1,095,411
Property and Equipment, Net		15,064,592			22,903,154
Right of use assets, net		5,511,519			726,194
Investment in LLC – Related Party		3,740,438			2,500,000
Note Receivable		685,000			350,000
Total Long-Term Assets		26,088,520			27,574,759

TOTAL ASSETS	$	37,313,393		$	42,867,702

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	3,321,172		$	3,245,566
Non-Trade payables		1,959,900			1,950,567
Accounts payable – related party		3,919,796			3,932,716
Accrued interest		42,013			1,325,286
Due to affiliate		69,000			69,000
Current portion of debt		332,252			5,283,647
Current portion of convertible debt, (net of unamortized discount of $0 and $40,655)		9,485,418			571,618
Current portion of operating lease liabilities, net		88,791			151,806
Current portion of finance lease liabilities, net		1,472,880			-
Total Current Liabilities		20,691,222			16,530,206

LONG-TERM LIABILITIES
Notes payable		2,195,854			548,477
Convertible note payables		-			8,620,412
Reclamation liability		19,939,332			18,951,587
Operating lease liabilities, net		567,724			562,428
Finance lease liabilities, net		2,991,966			-
Total Long-Term Liabilities		25,694,876			28,682,904

Total Liabilities		46,386,098			45,213,110

STOCKHOLDERS’ EQUITY (DEFICIT)
AREC - Class A Common stock: $0.0001 par value; 230,000,000 shares authorized, 66,860,522 and 65,084,992 shares issued and outstanding		6,685			6,508
Additional paid-in capital		167,180,697			163,441,655
Accumulated deficit		(176,196,598	)		(165,793,571	)
Total American Resources Corporation Stockholders’ Equity (Deficit)		(9,009,216	)		(2,345,408	)
Non controlling interest		(63,489	)		-
Total stockholders’ deficit		(9,072,705	)		(2,345,408	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	37,313,393		$	42,867,702

The accompanying footnotes are integral to the unaudited consolidated financial statements

Table of Contents

AMERICAN RESOURCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

UNAUDITED

	For the three months ended September 30, 2022			For the three months ended September 30, 2021			For the nine months ended September 30, 2022			For the nine months ended September 30, 2021

Coal Sales	$	9,441,366		$	2,779,193		$	34,442,413		$	3,121,782
Metal Aggregating, Processing and Sales		4,988			20,510			45,507			48,385
Royalty Income		63,384			14,220			301,646			47,614

Total Revenue		9,509,738			2,813,923			34,789,566			3,217,781

Cost of Coal Sales and Processing		(6,955,403	)		(3,068,847	)		(15,415,398	)		(4,813,688	)
Accretion Expense		(356,303	)		(305,636	)		(987,744	)		(916,909	)
Depreciation		(602,503	)		(495,676	)		(1,858,886	)		(1,364,220	)
Amortization of Mining Rights		(311,685	)		(314,765	)		(926,764	)		(938,135	)
General and Administrative		(734,515	)		(826,480	)		(2,658,376	)		(2,501,548	)
Professional Fees		(302,732	)		(287,414	)		(889,157	)		(1,191,397	)
Production Taxes and Royalties		(1,185,970	)		(215,681	)		(2,791,455	)		(883,339	)
Development Costs		(3,692,774	)		(5,142,306	)		(22,009,368	)		(10,009,860	)

Total Operating Expenses		(14,141,885	)		(10,656,805	)		(47,537,148	)		(22,619,096	)

Net Loss from Operations		(4,632,147	)		(7,842,882	)		(12,747,582	)		(19,401,315	)

Other Income (loss)		36,224			(58,340	)		194,381			(469,927	)
Unrealized loss on trading securities		(1,960	)		-			(9,562	)		-
Gain (loss) on cancelation of debt		(362,377	)		-			3,050,775			-
Amortization of debt discount and issuance costs		-			(3,179	)		-			(8,637	)
Interest Income		1,162			85,901			14,489			187,293
Interest expense		(310,681	)		(1,095,021	)		(969,018	)		(2,260,965	)
Total Other income (expense)		(637,632	)		(1,070,639	)		2,281,065			(2,552,236	)

Net Income (Loss)	$	(5,226,840	)	$	(8,913,521	)	$	(10,466,517	)	$	(21,953,551	)

Less: Non-Controlling interest		42,939			-			63,489			-

Net loss attributable to American Resources Corporation shareholders		(5,226,840	) )		-			(10,403,028	)		-

Net loss per common share - basic and diluted	$	(0.08	)	$	(0.15	)	$	(0.16	)	$	(0.41	)

Weighted average common shares outstanding		66,377,788			60,065,087			65,846,220			53,087,092

The accompanying footnotes are integral to the unaudited consolidated financial statements

Table of Contents

AMERICAN RESOURCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD FROM JANUARY 1, 2021 THROUGH SEPTEMBER 30, 2021 AND JANUARY 1, 2022 THROUGH SEPTEMBER 30, 2022

UNAUDITED

Statement of Stockholders’ Deficit

September 30, 2021

	American Resources
	Common Stock
	Par value		0.0001					Accumulated
	Shares		Amount		APIC			Deficit			Total

Balance December 31, 2020		42,972,762	$	4,256	$	113,279,448		$	(133,289,247	)	$	(20,005,543	)

Adjustment for Prior Year		-		40		114,991			(115,023	)		8

Adjusted Opening Balance		42,972,762		4,296		113,394,439			(133,404,270	)		(20,005,535	)

Shares issued in conjunction with warrant and option conversions		1,705,508		171		2,257,541			-			2,257,712
Shares issued in connection with debt and payable conversions		4,757,628		476		10,131,508			-			10,131,984

Shares issued pursuant to restricted stock offering		425,000		43		1,274,957			-			1,275,000

Shares issued for services		10,000		1		9,999			-			10,000

Amortization of Warrant and Stock Option Expense		-		-		115,025			-			115,025

Net Loss		-		-		-			(6,389,857	)		(6,389,857	)

Balance March 31, 2021		49,870,898		4,987		127,183,469			(139,794,127	)		(12,605,671	)

Shares issued in connection with warrant and option conversions		25,000		3		11,700			-			11,703

Shares issued in connection with debt and payable conversions		380,289		38		625,237			-			625,276

Shares issued in connection with registered offering		8,600,000		860		27,942,140			-			27,943,000

Amortization of debt discount		-		-		(128,568	)		-			(128,568	)

Stock Compensation - Options		-		-		115,025			-			115,025

Net Loss		-		-		-			(6,650,174	)		(6,650,174	)

Balance June 30, 2021		58,876,187	$	5,888	$	155,749,003		$	(146,444,301	)	$	9,310,590

Shares issued in connection with warrant and option conversions		2,000		-		2,100			-			2,100

Shares issued in connection with debt and payable conversions		1,951,531		195		2,635,380			-			2,635,385

Amortization of debt discount		-		-		(368,876	)		-			(368,876	)

Stock Compensation - Options		-		-		101,615			-			101,615

Net Loss		-		-		-			(8,913,521	)		(8,913,521	)

Balance September 30, 2021		60,829,718	$	6,083	$	158,119,222		$	(155,357,822	)	$	2,767,483

The accompanying footnotes are integral to the unaudited consolidated financial statements

Table of Contents

	Par value		0.0001					Accumulated			Non-controlling
	Shares		Amount		APIC			Deficit			interest			Total

Balance December 31, 2021		65,084,992	$	6,508	$	163,441,655		$	(165,793,571	)	$	-		$	(2,345,408	)

Issuance of common shares for Warrant Conversion		488,594		50		665,341			-			-			665,391

Issuance of common shares for Conversion of debt and interest		582,885		58		622,152			-			-			622,210

Amortization of debt discount		-		-		(40,655	)		-			-			(40,655	)

Stock compensation - options		-		-		199,843			-			-			199,843

Net Loss		-		-					(2,745,018	)		(7,884	)		(2,752,902	)

SEC Form 10-Q filed by American Resources Corporation