American Resources Corp - FORM 10-Q

Attached files

file	filename
EX-95.1 - MINE SAFETY DISCLOSURE - American Resources Corp	arec_ex951.htm
EX-32.2 - CERTIFICATION - American Resources Corp	arec_ex322.htm
EX-32.1 - CERTIFICATION - American Resources Corp	arec_ex321.htm
EX-31.2 - CERTIFICATION - American Resources Corp	arec_ex312.htm
EX-31.1 - CERTIFICATION - American Resources Corp	arec_ex311.htm
EX-21.1 - SUBSIDIARIES - American Resources Corp	arec_ex211.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: March 31, 2021

☐	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, Indiana

(Address and Zip Code of principal executive offices)

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

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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post 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 ☒

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	AREC	NASDAQ Capital Market
Warrant	ARECW	NASDAQ Capital Market

As of May 12, 2021, the registrant had 51,921,024 shares of Class A common stock issued and outstanding.

AMERICAN RESOURCES CORPORATION

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements		3

	Consolidated Balance Sheets (Unaudited)		4

	Consolidated Statements of Operation (Unaudited)		5

	Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months ended March 31, 2021 and 2020 (unaudited)		6

	Consolidated Statements of Cash Flows (Unaudited)		8

	Notes to Unaudited Consolidated Financial Statements		9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		32

Item 4.	Controls and Procedures		32

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		33

Item 1A.	Risk Factors		33

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds		33

Item 3.	Defaults upon Senior Securities		33

Item 4.	Mine Safety Disclosures		33

Item 5.	Other Information		33

Item 6.	Exhibits		34

SIGNATURES			36

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

AMERICAN RESOURCES CORPORATION

CONSOLIDATED

FINANCIAL STATEMENTS

(UNAUDITED)

For the three months ended

March 31, 2021

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AMERICAN RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS

UNAUDITED

	March 31, 2021			December 31, 2020

ASSETS

CURRENT ASSETS
Cash	$	7,097,465		$	10,617,495
Accounts Receivable		3,274			38,650
Inventory		150,504			150,504
Prepaid fees		241,668			175,000
Accounts Receivable - Other		234,240			234,240
Total Current Assets		7,727,149			11,215,889

OTHER ASSETS
Cash - restricted		1,233,708			583,708
Processing and rail facility		11,591,273			11,591,273
Underground equipment		7,403,417			6,838,417
Surface equipment		2,527,576			2,527,576
Acquired mining rights		561,575			561,575
Coal refuse storage		12,134,192			12,134,192
Less Accumulated Depreciation		(13,432,024	)		(12,726,809	)
Land		1,572,435			1,572,435
Investment in LLC – Related Party		2,275,000			-
Note Receivable		4,117,139			4,117,139
Total Other Assets		29,984,291			27,199,506

TOTAL ASSETS	$	37,711,440		$	38,415,395

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	3,049,695		$	4,288,794
Non-Trade Payables		3,476,236			3,850,781
Accounts payable – related party		712,872			679,146
Accrued interest		247,271			1,043,519
Due to affiliate		74,000			74,000
Current portion of long term-debt		5,805,453			10,997,692
Convertible note payables – short term (net of unamortized discount of $234,184 and $0)		10,906,144			-
Current portion of reclamation liability		2,327,169			2,327,169
Total Current Liabilities		26,598,840			23,261,101

OTHER LIABILITIES
Long-term portion of note payable (net of issuance costs of $402,788 and $405,667)		5,033,631			5,330,752
Convertible note payables – long term (net of unamortized discount of $829,650 and $1,854,421)		2,593,703			14,300,907
Reclamation liability		15,833,772			15,528,135
Total Other Liabilities		23,461,106			35,159,794

Total Liabilities		50,059,946			58,420,895

STOCKHOLDERS’ EQUITY (DEFICIT)
AREC - Class A Common stock: $.0001 par value; 230,000,000 shares authorized, 50,014,410 and 40,522,762 shares issued and outstanding		4,984			4,256
AREC - Series A Preferred stock: $.0001 par value; 100,000 shares authorized, nil and nil shares issued and outstanding		-			-
AREC - Series B Preferred stock: $.001 par value; 20,000,000 shares authorized, nil and nil shares issued and outstanding, respectively		-			-
AREC - Series C Preferred stock: $.001 par value; 20,000,000 shares authorized, nil and nil shares issued and outstanding		-			-
Additional paid-in capital		127,440,638			113,279,448
Accumulated deficit		(139,794,126	)		(133,289,247	)
Total Stockholders’ Equity (Deficit)		(12,348,504	)		(20,005,500	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	37,711,442		$	38,415,395

The accompanying footnotes are integral to the unaudited consolidated financial statements

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AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

	For the three months ended			For the three months ended
	March 31, 2021			March 31, 2020

Coal Sales	$	3,274		$	524,334
Royalty Income		7,372			-

Total Revenue		10,646			524,334

Cost of Coal Sales and Processing		(800,515	)		(1,855,187	)
Accretion Expense		(305,636	)		(370,587	)
Depreciation		(393,530	)		(915,052	)
Amortization of Mining Rights		(311,685	)		(313,224	)
General and Administrative		(1,081,447	)		(842,925	)
Professional Fees		(710,032	)		(194,046	)
Production Taxes and Royalties		(568,182	)		(160,230	)
Development Costs		(1,811,951	)		(128,159	)

Total Operating expenses		(5,982,978	)		(4,779,410	)

Net Loss from Operations		(5,972,332	)		(4,255,076	)

Other Income and (expense)
Other Income		35,296			1,412,005
Amortization of debt discount and debt issuance costs		(2,879	)		-
Interest Income		41,171			82,343
Interest expense		(491,113	)		(500,640	)
Total Other income (expense)		(417,525	)		993,708	)

Net loss attributable to American Resources Corp. Shareholders	$	(6,389,857	)	$	(3,261,368	)

Net loss per common share - basic and diluted	$	(0.14	)	$	(0.12	)

Weighted average common shares outstanding- basic and diluted		46,917,910			27,267,197

The accompanying footnotes are integral to the unaudited consolidated financial statements

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AMERICAN RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD FROM JANAURY 1, 2021 THROUGH MARCH 31, 2021 AND JANAURY 1, 2020 THROUGH MARCH 31, 2020

UNAUDITED

	American Resources						American Resources						American Resources
	Common Stock						Preferred Series A						Preferred Series C
	Par value			0.0001			Par Value			0.0001			Par Value			0.0001			Accumulated
	Shares		Amount		APIC		Shares		Amount		APIC		Shares		Amount		APIC		Deficit			Total
Balance December 31, 2019		27,410,512		2,740		90,326,104		-		-		-		-		-		-		(123,033,485	)		(32,704,641	)

Issuance of Warrants in conjunction with Convertible Notes						552,562																	552,562

Amortization of Warrant and Option Expense						115,025														(115,025	)		-

Net loss																				(3,261,368	)		(3,261,368	)

Balance March 31, 2020		27,410,512		2,740		90,993,691		-		-		-		-		-		-		(126,409,878	)		(35,413,447	)

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AMERICAN RESOURCES CORP

Statement of Stockholders' Deficit

March 31, 2021

	American Resources						American Resources				American Resources
	Common Stock						Preferred Series A				Preferred Series C
	Par value			0.0001			Par Value		0.0001		Par Value		0.0001		Accumulated
	Shares		Amount		APIC		Shares	Amount		APIC	Shares	Amount		APIC	Deficit			Total

Stock Compensation - Options						147,000													147,000

Shares issued in connection with warrant conversions		1,878,122		221		2,055,502													2,055,723

Amortization of beneficial conversion features						590,464													590,464

Shares issued in connection with debt and payable conversions		4,658,526		457		9,845,183													9,845,640
																			-
Shares issued pursuant to restricted stock offering		425,000		43		1,104,958													1,105,000

Shares issued for services		80,000		8		187,992													188,000
																			-
Amortization of Warrant and Stock Option Expense						115,025													115,025
																			-
Net Loss																(6,389,857	)		(6,389,857	)

Balance March 31, 2021		50,014,410		4,984		127,440,638										(139,794,126	)		(12,348,504	)

The accompanying footnotes are integral to the unaudited consolidated financial statements

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AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED

	For the three months ended			For the three months ended
	March 31, 2021			March 31, 2020

Cash Flows from Operating activities:
Net loss	$	(6,389,857	)	$	(3,261,368	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		393,530			915,052
Amortization of mining rights		311,685			313,224
Accretion expense		305,636			370,587
Reduction of ARO liability due to sale of assets		-			(312,338	)
Warrant expense		115,025			115,025
Issuance of common share options for compensation		147,000			-
Amortization of beneficial conversion feature		590,464			-
Issuance of common shares for services		188,000			-
Change in current assets and liabilities:

Accounts receivable		35,376			2,387,505
Prepaid expenses and other assets		(66,668	)		(175,000	)
Inventory		-			365,126
Accounts payable		(1,613,643	)		555,516
Accounts payable – related party		33,726			85,446
Accrued interest		(796,248	)		(506,383	)
Cash provided by (used in) operating activities		(6,745,974	)		852,392

Cash Flows from Investing activities:

Cash paid for PPE, net		(565,000	)		(408,915	)
Investment in LLC		(2,275,000	)		-
Cash provided by (used in) investing activities		(2,840,000	)		(408,915	)

Cash Flows from Financing activities:

Principal payments on long term debt		(62,294	)		(72,255	)
Proceeds from long term debt		-			28,000
Issuance of common shares for debt and payable conversion		1,997,514			-
Payments on factoring agreement, net		-			(1,807,443	)
Proceeds from convertible note		1,620,000			1,598,642
Proceeds from warrant conversions		2,055,723			-
Proceeds from sale of common stock, net		1,105,001			-
Cash provided by financing activities		6,715,944			(253,056	)

Increase (decrease) in cash and restricted cash		(2,870,030	)		190,421

Cash and restricted cash, beginning of period		11,201,203			268,811

Cash and restricted cash, end of period	$	8,331,173		$	459,232

Supplemental Information
Non-cash investing and financing activities

Conversion of debt and trade payables to common shares	$	1,997,514		$	-
Discount on note due to beneficial conversion feature	$	715,740		$	-

Cash paid for interest	$	42,426		$	165,728
Cash paid for income taxes	$	-		$	-

The accompanying footnotes are integral to the unaudited consolidated financial statements

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AMERICAN RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

American Resources Corporation (ARC or the Company) operates through subsidiaries that were formed or acquired in 2020, 2019, 2018, 2016 and 2015 for the purpose of acquiring, rehabilitating and operating various natural resource assets including coal used in the steel making and industrial markets, critical and rare earth elements used in the electrification economy and aggregated metal and steel products used in the recycling industries.

Basis of Presentation and Consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries American Carbon Corp (ACC), Deane Mining, LLC (Deane), Quest Processing LLC (Quest Processing), ERC Mining Indiana Corp (ERC), McCoy Elkhorn Coal LLC (McCoy), Knott County Coal LLC (KCC), Wyoming County Coal (WCC),Perry County Resources LLC (PCR), American Rare Earth LLC (ARE) and American Metals LLC (AM). All significant intercompany accounts and transactions have been eliminated.

The accompanying Consolidated Financial Statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

Interim Financial Information

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. In the opinion of management, these interim unaudited Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or any other period. These financial statements should be read in conjunction with the Company’s 2020 audited financial statements and notes thereto which were filed on form 10-K on March 11, 2021.

Going Concern: The Company has suffered recurring losses from operations and currently a working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. We plan to generate profits by expanding current coal operations as well as developing new coal operations. However, we will need to raise the funds required to do so through sale of our securities or through loans from third parties. We do not have any commitments or arrangements from any person to provide us with any additional capital. If additional financing is not available when needed, we may need to cease operations. We may not be successful in raising the capital needed to expand or develop operations. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.

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Convertible Preferred Securities: We account for hybrid contracts that feature conversion options in accordance with generally accepted accounting principles in the United States. ASC 815, Derivatives and Hedging Activities (“ASC 815”) requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

We also follow ASC 480-10, Distinguishing Liabilities from Equity (“ASC 480-10”) in its evaluation of the accounting for a hybrid instrument. A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception (b) variations in something other than the fair value of the issuer’s equity shares or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives and are carried as a liability at fair value at each balance sheet date with remeasurements reported in interest expense in the accompanying Consolidated Statements of Operations.

Cash is maintained in bank deposit accounts which, at times, may exceed federally insured limits. To date, there have been no losses in such accounts.

Restricted cash: As part of the Kentucky New Markets Development Program (See Note 3) an asset management fee reserve was set up in the amount of $116,115. The funds are held to pay annual asset management fees to an unrelated party through 2021. The balance as of March 31, 2021 and December 31, 2020 was $19,138 and $47,987, respectively. The total balance of restricted cash also includes amounts held under the management agreement.

During 2020, the Company established an escrow account for certain assumed liabilities in the PCR acquisition. The balance as of March 31, 2021 and December 31, 2020 includes in the amount of $447,070 and $347,070, respectively, to pay for assumed liabilities in the PCR asset acquisition.

During 2019 the Company established a reclamation bonding collateral fund. The balance of the restricted cash being held totaled $250,000 and $250,000 as of March 31, 2021 and December 31, 2020.

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The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that agrees to the total of those amounts as presented in the consolidated statement of cash flows for the three months ended March 31, 2021 and March 31, 2020:

	March 31, 2021		March 31, 2020
Cash	$	7,097,465	$	43,745
Restricted Cash		1,233,708		415,487
Total cash and restricted cash presented in the consolidated statement of cash flows	$	8,331,173	$	459,232

Asset Retirement Obligations (ARO) – Reclamation: At the time they are incurred, legal obligations associated with the retirement of long-lived assets are reflected at their estimated fair value, with a corresponding charge to mine development. Obligations are typically incurred when we commence development of underground and surface mines, and include reclamation of support facilities, refuse areas and slurry ponds or through acquisitions.

Obligations are reflected at the present value of their future cash flows. We reflect accretion of the obligations for the period from the date they incurred through the date they are extinguished. The asset retirement obligation assets are amortized using the units-of-production method over estimated recoverable (proved and probable) deposits. We are using a discount rate of 10%. Federal and State laws require that mines be reclaimed in accordance with specific standards and approved reclamation plans, as outlined in mining permits. Activities include reclamation of pit and support acreage at surface mines, sealing portals at underground mines, and reclamation of refuse areas and slurry ponds.

We assess our ARO at least annually and reflect revisions for permit changes, change in our estimated reclamation costs and changes in the estimated timing of such costs.

The table below reflects the changes to our ARO:

Balance at December 31, 2020	$	17,855,305
Accretion – 3 months March 31, 2021		305,636
Reclamation work – 3 months March 31, 2021		-
Balance at March 31, 2021	$	18,160,941

Balance at December 31, 2019	$	19,839,782
Accretion – 3 months March 31, 2020		370,587
Reclamation work – 3 months March 31, 2020		-
Sale of PCR Permits		(361,225	)
Balance at March 31, 2020	$	19,849,144

Allowance For Doubtful Accounts: The Company recognizes an allowance for losses on trade and other accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging and expected future write-offs, as well as an assessment of specific identifiable amounts considered at risk or uncollectible.

Allowance for trade receivables as of March 31, 2021 and December 31, 2020 amounted to $0, for both periods. Allowance for other accounts receivables as of March 31, 2021 and December 31, 2020 amounted to $0 and $0, respectively.

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of March 31, 2021 and December 31, 2020.

Reclassifications: Reclassifications have been made to conform with current year presentation.

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NOTE 2 - PROPERTY AND EQUIPMENT

At March 31, 2021 and December 31, 2020, property and equipment were comprised of the following:

	March 31, 2021			December 31, 2020
Processing and rail facility	$	11,591,273		$	11,591,273
Underground equipment		7,403,417			6,838,417
Surface equipment		2,527,576			2,527,576
Coal refuse storage		12,134,192			12,134,192
Mine Development		561,575			561,575
Land		1,572,435			1,572,435
Less: Accumulated depreciation		(13,432,024	)		(12,726,809	)

Total Property and Equipment, Net	$	22,358,444		$	22,498,659

Depreciation expense amounted to $393,530 and $915,052 for the period March 31, 2021 and March 31, 2020, respectively.

The estimated useful lives are as follows:

Processing and Rail Facilities	7-20 years
Surface Equipment	7 years
Underground Equipment	5 years
Mining Rights	5-10 years
Coal Refuse Storage	10 years

NOTE 3 - NOTES PAYABLE

During the three-month period ended March 31, 2021, principal reductions on long term debt totaled $8,136,378, primarily due to conversions of principal into Class A Common shares. During the three-month period ended March 31, 2021, increases to long term debt totaled $1,620,000, primarily from cash received in the form of a senior convertible note totaling $1,620,000. The notes have a minimum offering amount of $12,500,000 and maximum of $25,000,000 and minimum investment of $500,000. The notes carry a 24-month term, 12.5% interest 10% warrant coverage and a conversion price of $1.05. The warrants have an exercise price of $1.50.

During the three-month period ended March 31, 2020, principal payments on long term debt totaled $72,255. During the three-month period ended March 31, 2020, increases to long term debt totaled $1,626,642, primarily from cash received in the form of a senior convertible note totaling $1,598,642. The notes have a minimum offering amount of $12,500,000 and maximum of $25,000,000 and minimum investment of $500,000. The notes carry a 24-month term, 12.5% interest 10% warrant coverage and a conversion price of $1.05. The warrants have an exercise price of $1.50.

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During the three-month period ended March 31, 2021 proceeds from the factoring agreement totaled $0 and repayments according to the factoring agreement totaled $0.

During the three-month period ended March 31, 2020 proceeds from the factoring agreement totaled $0 and repayments according to the factoring agreement totaled $1,807,443.

NOTE 4 - RELATED PARTY TRANSACTIONS

The Company leases property from Land Resources & Royalties (LRR), an entity controlled by certain members of the Company’s management who are also directors and shareholders. Until July 1, 2018, LRR was consolidated as a VIE resulting in transaction between the two companies to be eliminated upon consolidation. Upon deconsolidation, amounts paid and owed to LRR have been disclosed discreetly in the consolidated financial statements. For the three-month period ending March 31, 2021, royalty expense incurred with LRR amounted to $113,873 and amounts advanced from LRR amounted $0 and amounts repaid amounted to $0. As of March 31, 2021, total amounts owed LRR amounted to $712,872. For the three-month period ending March 31, 2020, royalty expense incurred with LRR amounted to $85,419 and amounts advanced from LRR amounted to $932 and amounts repaid to LRR amounted to $905. As of March 31, 2020, total amounts owed LRR amounted to $803,602.

On February 13, 2020, the Company entered into a Contract Services Agreement with Land Betterment Corporation, an entity controlled by certain members of the Company’s management who are also directors and shareholders. The contract terms state that service costs are passed through to the Company with a 10% mark-up and a 50% share of cost savings which includes payroll covering aforementioned members of the Company’s management. The services agreement covers all of the Company’s properties. For the 3 months ended March 31, 2020 amounts incurred under the agreement amounted to $107,621 and amounts paid totaled $97,837. As of March 31, 2020, amounts payable under the agreement amounted to $9,784. For the 3 months ended March 31, 2020, service charges covering members of the Company’s management amounted to $0. For the 3 months ended March 31, 2020 amounts incurred under the agreement amounted to $107,621 and amounts paid totaled $97,837. As of March 31, 2020, amounts payable under the agreement amounted to $9,784. For the 3 months ended March 31, 2020, service charges covering members of the Company’s management amounted to $0.

During January 2021, the company invested $2,250,000 for 50% ownership and become the managing member of American Opportunity Venture, LLC. (AOV) It has been determined that AOV is a variable interest entity and that the Company is not primary beneficiary. As such, the investment in AOV will be accounted for using the equity method of accounting.

NOTE 5 – EQUITY TRANSACTIONS

Employee stock compensation expense for the three-month period ending March 31, 2021 and 2020 amounted to $262,025 and $115,025 respectively.

Stock Sales

On March 17, 2021, 425,000 of restricted common shares were sold. Gross proceeds to the company amounted to $1,275,000.

Investor Relations Contract

On January 26, 2021, the Company entered into a six-month investor relations agreement with RedChip Companies, Inc. As compensation for the agreement, the Company issued 20,000 Class A Common shares. The share price on January 26, 2021 was $2.75 resulting in an expense recorded in the amount of $55,000.

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Class A Common Shares Issued in exchange for services, trade payables and related party debt

On January 12, 2021, the Company issued 10,000 Class A Common Shares in connection with mining contractor services.

On January 19, 2021, the Company issued 87,110 Class A Common Shares to satisfy $225,000 of trade payables.

On January 20, 2021, the Company issued 50,000 Class A Common Shares in connection with securing rights for certain Rare Earth Mineral technologies.

On February 5, 2021, the Company issued 121,360 class A common shares pursuant to the purchase of $250.002 notes payable by a related party at a price of $2.06. The purchased note payable was written off due to lack of collectability.

On February 16, 2021, the Company issued 220,848 class A common shares pursuant to the conversion of $1,448,762 of bonding payables.

On February 17, 2021, the Company issued 17,000 Class A Common Shares to satisfy lease obligations.

Warrant Exercises

On January 11, 2021, the Company issued 10,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.05.

On January 19, 2021, the Company issued 5,671 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.50.

On January 25, 2021, the Company issued 12,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.71.

On January 25, 2021, the Company issued 30,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.71.

On January 25, 2021, the Company issued 50,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.71.

On January 26, 2021, the Company issued 25,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.75.

On January 26, 2021, the Company issued 5,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.75.

On January 27, 2021, the Company issued 1,400 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.40.

On February 3, 2021, the Company issued 6,652 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $4.50.

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On February 4, 2021, the Company issued 100,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $4.68.

On February 4, 2021, the Company issued 14,884 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $4.68.

On February 5, 2021, the Company issued 12,309 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $6.00.

On February 5, 2021, the Company issued 30,753 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $6.00.

On February 8, 2021, the Company issued 114,750 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 8, 2021, the Company issued 22,700 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 8, 2021, the Company issued 50,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 8, 2021, the Company issued 7,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 8, 2021, the Company issued 62,500 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 8, 2021, the Company issued 7,500 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 8, 2021, the Company issued 15,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 8, 2021, the Company issued 484,267 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 8, 2021, the Company issued 37,569 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.15.

On February 9, 2021, the Company issued 4,204 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.32.

On February 9, 2021, the Company issued 44,850 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $7.32.

On February 10, 2021, the Company issued 6,157 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $6.77.

On February 12, 2021, the Company issued 799 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $6.34.

On February 12, 2021, the Company issued 113,100 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $6.34.

On February 12, 2021, the Company issued 68,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $6.34.

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On February 17, 2021, the Company issued 2,356 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $6.51.

On February 19, 2021, the Company issued 5,700 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $6.55.

On February 23, 2021, the Company issued 55,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $5.08.

On February 25, 2021, the Company issued 5,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $4.54.

On February 25, 2021, the Company issued 100,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $4.54.

On March 1, 2021, the Company issued 360 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $5.05.

On March 3, 2021, the Company issued 400 shares of Class A Common Stock based up on a cash pay warrant exercise. The share price at issuance was $4.55.

On March 4, 2021, the Company issued 667 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $3.88.

On March 5, 2021, the Company issued 533 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $3.93.

On March 9, 2021, the Company issued 175,000 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $4.20.

On March 17, 2021, the Company issued 225 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $4.58.

Note Conversions

On January 7, 2021, the Company issued 200,000 class A common shares pursuant to the conversion of $410,000 notes at a price of $2.05.

On January 7, 2021, the Company issued 40,000 class A common shares pursuant to the conversion of $82,000 notes at a price of $2.05.

On January 19, 2021, the Company issued 100,000 class A common shares pursuant to the conversion of $223,000 notes at a price of $2.23.

On January 19, 2021, the Company issued 500,000 class A common shares pursuant to the conversion of $1,115,000 notes at a price of $2.23.

On January 24, 2021, the Company issued 476,000 class A common shares pursuant to the conversion of $499,800 senior secured convertible notes at a price of $1.05.

On January 25, 2021, the Company issued 82,288 class A common shares pursuant to the conversion of $223,000 notes at a price of $2.71.

On February 2, 2021, the Company issued 150,000 class A common shares pursuant to the conversion of $562,500 notes at a price of $3.75.

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On February 2, 2021, the Company issued 60,000 class A common shares pursuant to the conversion of $225,000 notes at a price of $3.75.

On February 3, 2021, the Company issued 134,589 class A common shares pursuant to the conversion of $141,318 senior secured convertible notes at a price of $3.75.

On February 4, 2021, the Company issued 300,000 class A common shares pursuant to the conversion of $1,395,000 notes at a price of $4.65.

On February 4, 2021, the Company issued 120,000 class A common shares pursuant to the conversion of $558,000 notes at a price of $4.65.

On February 5, 2021, the Company issued 40,600 class A common shares pursuant to the conversion of $244,006 notes at a price of $6.01.

On February 5, 2021, the Company issued 16,240 class A common shares pursuant to the conversion of $97,602 notes at a price of $6.01.

On February 5, 2021, the Company issued 1,048,644 class A common shares pursuant to the conversion of $1,101,076 senior secured convertible notes at a price of $1.05.

On February 8, 2021, the Company issued 169,164 class A common shares pursuant to the conversion of $1,189,223 notes at a price of $7.03.

On February 8, 2021, the Company issued 500,000 class A common shares pursuant to the conversion of $525,000 senior secured convertible notes at a price of $1.05.

On February 16, 2021, the Company issued 220,848 class A common shares pursuant to the conversion of $525,000 senior secured convertible notes at a price of $1.05.

On March 16, 2021, the Company issued 319,127 class A common shares pursuant to the conversion of $525,000 senior secured convertible notes at a price of $1.05.

On March 18, 2021, the Company issued 42,476 class A common shares pursuant to the conversion of $525,000 senior secured convertible notes at a price of $1.05.

New Warrant Issuances

On January 26, 2021, the Company issued Common Stock Purchase Warrant “A-10” for rare earth capture advisory. The warrant provides the option to purchase 10,000 Class A Common Shares at a price of $2.05. The warrants expire on January 26, 2024.

On February 2, 2021, the Company issued Common Stock Purchase Warrant “C-37” in conjunction with the issuance of $600,000 convertible note. The warrant provides the option to purchase 60,000 Class A Common Shares at a price of $1.50. The warrants expire on February 2, 2023.

On February 7, 2021, the Company issued Common Stock Purchase Warrant “A-11” for rare earth processing advisory. The warrant provides the option to purchase 50,000 Class A Common Shares at a price of $4.25. The warrants expire on February 7, 2026.

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The company uses the Black Scholes option pricing model to value its warrants and options. The significant inputs are as follows:

	March 31, 2021			March 31, 2020
Expected Dividend Yield		0	%		0	%
Expected volatility		123-617	%		123-617	%
Risk-free rate		1.40-1.62	%		1.40-1.62	%
Expected life of warrants	1.635-5.588 years			2.310- 5.748 years

Company Warrants:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Exercisable (Vested) – December 31, 2019		10,689,904	$	1.856		2.310	$	1,746,544
Granted		3,969,407	$	1.160		2.596	$	-
Forfeited or Expired		3,138,889	$	4.452		1.21	$	2,363,611
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2020		11,529,422	$	0.892		2.751	$	5,027,760
Exercisable (Vested) - March 31, 2020		11,529,422	$	0.891		2.753	$	5,027,760

Exercisable (Vested) – December 31, 2020		8,401,221	$	1.135		2.152	$	7,453,214
Granted		60,000	$	3.883		4.521	$	18,000
Forfeited or Expired		-	$	-		-	$	-
Exercised		1,681,022	$	1.215		3.094	$	5,321,781
Outstanding - March 31, 2021		6,780,199	$	1.139		1.635	$	18,277,625
Exercisable (Vested) - March 31, 2021		6,780,199	$	1.139		1.635	$	18,277,625

Company Options:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding – December 31, 2019		1,056,830	$	1.960		5.998	$	-
Exercisable (Vested) – December 31, 2019		273,943	$	1.821		5.072	$	-
Granted		-	$	-		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2020		1,056,830	$	1.960		5.748	$	551,260
Exercisable (Vested) - March 31, 2020		273,943	$	1.821		4.823	$	58,287

Outstanding – December 31, 2020		2,159,269	$	1.606		5.660	$	1,919,129
Exercisable (Vested) – December 31, 2020		888,659	$	1.581		5.047	$	749,470
Granted		75,000	$	2.560		6.847	$	105,000
Forfeited or Expired		50,000	$	1.050		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2021		2,184,269	$	1.651		5.588	$	5,010,909
Exercisable (Vested) - March 31, 2021		938,659	$	1.739		5.260	$	2,149,710

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NOTE 6 - CONTINGENCIES

In the course of normal operations, the Company is involved in various claims and litigation that management intends to defend. The range of loss, if any, from potential claims cannot be reasonably estimated. However, management believes the ultimate resolution of matters will not have a material adverse impact on the Company’s business or financial position. These claims include amounts assessed by the Kentucky Energy Cabinet totaling $1,415,590, the Company has accrued $1,894,621 as a payable to the Commonwealth of Kentucky including amounts owed to the Kentucky Energy Cabinet. Claims assessed by the Mine Health Safety Administration amount to $856,498 of which the Company has accrued $480,072 as a payable. During 2019, McCoy and Deane, received notice of intent to place liens for amounts owed on federal excise taxes. The amounts associated with the notices are included in the company’s trade payables.

On November 7, 2018, Wyoming County Coal LLC, acquired 5 permits, coal processing and loading facilities, surface ownership, mineral ownership, and coal refuse storage facilities from unrelated entities. Consideration for the acquired assets was the assumption of reclamation bonds totaling $234,240, 1,727,273 shares of common stock of the company, a seller note of $350,000 and a seller note of $250,000. On September 20, 2019 Wyoming County received a Notice of Breach of the asset purchase agreement between WCC and Synergy Coal, LLC due to consideration of $225,000 not being paid, failure to file for permit transfers and pay delinquent transfer fees of $10,500 and other contract breaches, including failure to transfer reclamation surety bonds. During 2020, WCC has paid the delinquent transfer fees and has filed for permit transfer and the seller note was satisfactorily converted into the AREC’s convertible note offering. As a result of these steps, the seller notified us on May 17, 2020 that all breaches were cured. As of the balance sheet date, the West Virginia permit transfers have not yet been approved, the seller has not been paid cash amounts due, and WCC has not substituted its reclamation surety bonds for the seller’s bond collateral.

On April 3, 2019 KCC partially settled a case relating to a reclamation issue while the property was under former ownership. The settled amount is $100,000 which will be paid out of a prior insurance policy. The remaining portion of the case was settled during for amount of $299,037.59. The outstanding amount has not been paid as of the report date and is included in trade payables.

On September 26, 2019, the Company received notice that a certain lease assumption as part of the PCR acquisition was being disputed by the lessor (see note 1).

The Company, through its investment in AOV is proportionally a sponsor of the special purpose acquisition company, American Acquisition Opportunity Inc. (AMAO) As such it is proportionally obligated to fund operating and working capital deficits of AMAO up to $800,000. As of March 31, 2021, amounts under the note totaled $485,900 and has been repaid subsequent to the balance sheet date.

The company leases various office space some from an entity which was consolidated as a variable interest entity until June 30, 2018 (see note 4). The rental lease for the Company’s former principal office space expired in December 31, 2018 and continued on a month-to-month basis until February 15, 2020. On February 14, the Company moved its principal offices to 12115 Visionary Way Fishers, IN 46038. A lease through December 2026 was executed. We also rent office space from an affiliated entity, LRR, at 11000 Highway 7 South, Kite, Kentucky 41828 and pay $500 per month rent and the rental lease expires October 30, 2021.

NOTE 7 - SUBSEQUENT EVENTS

Warrant Exercises

On May 6, 2021, the Company issued 7,271 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $2.88.

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

This Form 10-Q and other reports filed by Registrant from time to time with the Securities and Exchange Commission (collectively the “Filings”) contain or may contain forward looking statements and information that are based upon beliefs of, and information currently available to, Registrant’s management as well as estimates and assumptions made by Registrant’s management. When used in the filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan” or the negative of these terms and similar expressions as they relate to Registrant or Registrant’s management identify forward looking statements. Such statements reflect the current view of Registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors relating to Registrant’s industry, Registrant’s operations and results of operations and any businesses that may be acquired by Registrant. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Although Registrant believes that the expectations reflected in the forward-looking statements are reasonable, Registrant cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results.

Overview

When we formed our company, our focus was to (i) construct and/or purchase and manage a chain of combined gasoline, diesel and natural gas (NG) fueling and service stations (initially, in the Miami, FL area); (ii) construct conversion factories to convert NG to liquefied natural gas (LNG) and compressed natural gas (CNG); and (iii) construct conversion factories to retrofit vehicles currently using gasoline or diesel fuel to also run on NG in the United States and also to build a convenience store to serve our customers in each of our locations.

On January 5, 2017, American Resources Corporation (ARC) executed a Share Exchange Agreement between the Company and Quest Energy Inc. (“Quest Energy”), a private company incorporated in the State of Indiana on May 2015 with offices at 12115 Visionary Way, Fishers, IN 46038, and due to the fulfillment of various conditions precedent to closing of the transaction, the control of the Company was transferred to the Quest Energy shareholders on February 7, 2017. This transaction resulted in Quest Energy becoming a wholly-owned subsidiary of ARC. Through Quest Energy, ARC was able to acquire coal mining and coal processing operations, substantially all located in eastern Kentucky and western West Virginia. On November 25, 2020, Quest Energy changed its name to American Carbon Corp. (American Carbon)

American Carbon currently has seven coal mining and processing operating subsidiaries: McCoy Elkhorn Coal LLC (doing business as McCoy Elkhorn Coal Company) (McCoy Elkhorn), Knott County Coal LLC (Knott County Coal), Deane Mining, LLC (Deane Mining) and Wyoming County Coal LLC (Wyoming County), Quest Processing LLC (Quest Processing), Perry County Resources (Perry County) located in eastern Kentucky and western West Virginia within the Central Appalachian coal basin, and ERC Mining Indiana Corporation (ERC) located in southwest Indiana within the Illinois coal basin. The coal deposits under control by the Company are generally comprise of metallurgical coal (used for steel making), pulverized coal injections (used in the steel making process) and high-BTU, low sulfur, low moisture bituminous coal used for a variety of uses within several industries, including industrial customers and specialty products. Since mid-2019, we have not mined or sold coal which is sold into the thermal coal markets. All production and future investment will be for the mining of metallurgical coal used in the steel and specialty markets.

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Efforts to diversify revenue streams have led to the establishment of additional subsidiaries; American Metals LLC (AM) which is focused on the recovery and sale of recovered metal and steel and American Rare Earth LLC (ARE) which is focused on the aggregation and monetization of critical and rare earth element deposits.

We have not classified, and as a result, do not have any “proven” or “probable” reserves as defined in United States Securities and Exchange Commission Industry Guide 7, and as a result, our company and its business activities are deemed to be in the exploration stage until mineral deposits are defined on our properties.

McCoy Elkhorn Coal LLC

General:

Located primarily within Pike County, Kentucky, McCoy Elkhorn is currently comprised of two mines (Mine #15 and the Carnegie 1 Mine) in “hot idle” status, and one mine in development (Carnegie 2 Mine), two coal preparation facilities (Bevins #1 and Bevins #2), and other mines in various stages of development or reclamation. McCoy Elkhorn sells its coal to a variety of customers, both domestically and internationally, primarily to the steel making industry as a high-vol “B” coal or blended coal. The coal controlled at McCoy Elkhorn (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

Mines:

Mine #15 is an underground mine in the Millard (also known as Glamorgan) coal seam and located near Meta, Kentucky. Mine #15 is mined via room-and-pillar mining methods using continuous miners, and the coal is belted directly from the stockpile to McCoy Elkhorn’s coal preparation facility. Mine #15 is currently a “company run” mine, whereby the Company manages the workforce at the mine. The coal from Mine #15 is stockpiled at the mine site and belted directly to the Company’s nearby coal preparation facilities. Production at Mine #15 re-commenced under Quest Energy’s ownership in September 2016.

The Carnegie 1Mine is an underground mine in the Alma and Upper Alma coal seams and located near Kimper, Kentucky. In 2011, coal production from the Carnegie Mine in the Alma coal seam commenced and then subsequently the mine was idled. Production at the Carnegie Mine was reinitiated in early 2017 under Quest Energy’s ownership and is currently being mined via room-and-pillar mining methods utilizing a continuous miner. The coal is stockpiled on-site and trucked approximately 7 miles to McCoy Elkhorn’s preparation facilities. The Carnegie Mine is currently operated as a modified contractor mine, whereby McCoy Elkhorn provides the mining infrastructure and equipment for the operations and pays the contractor a fixed per-ton fee for managing the workforce, procuring the supplies, and maintaining the equipment and infrastructure in proper working order.

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Beginning in January 2020 through the report date, Mine #15 and Carnegie 1 mines were idled due to the adverse market effects Covid-19 global pandemic.

Processing & Transportation:

The Bevins #1 Preparation Plant is an 800 ton-per hour coal preparation facility located near Meta, Kentucky, across the road from Mine #15. Bevins #1 has raw coal stockpile storage of approximately 25,000 tons and clean coal stockpile storage of 100,000 tons of coal. The Bevins #1 facility has a fine coal circuit and a stoker circuit that allows for enhance coal recovery and various coal sizing options depending on the needs of the customer. The Company acquired the Bevins Preparation Plants as idled facilities, and since acquisition, the primary work completed at the Bevins Preparation Plants by the Company includes rehabilitating the plants’ warehouse and replacing belt lines.

The Bevins #2 Preparation Plant is on the same permit site as Bevins #1 and is a 500 ton-per-hour processing facility with fine coal recovery and a stoker circuit for coal sizing options. Bevins #2 has raw coal stockpile storage of 25,000 tons of coal and a clean coal stockpile storage of 45,000 tons of coal. We are currently utilizing less than 10% of the available processing capacity of Bevins #1 and Bevins #2.

Both Bevins #1 and Bevins #2 have a batch-weight loadout and rail spur for loading coal into trains for rail shipments. The spur has storage for 110 rail cars and is serviced by CSX Transportation and is located on CSX’s Big Sandy, Coal Run Subdivision. Both Bevins #1 and Bevins #2 have coarse refuse and slurry impoundments called Big Groundhog and Lick Branch. While the Big Groundhog impoundment is nearing the end of its useful life, the Lick Branch impoundment has significant operating life and will be able to provide for coarse refuse and slurry storage for the foreseeable future at Bevins #1 and Bevins #2. Coarse refuse from Bevins #1 and Bevins #2 is belted to the impoundments. Both Bevins #1 and Bevins #2 are facilities owned by McCoy Elkhorn, subject to certain restrictions present in the agreement between McCoy Elkhorn and the surface land owner.

Both Bevins #1 and Bevins #2, as well as the rail loadout, are operational and any work required on any of the plants or loadouts would be routine maintenance. The allocated cost of for this property at McCoy Elkhorn Coal paid by the company is $95,210.

Due to additional coal processing storage capacity at Bevins #1 and Bevins #2 Preparation Plants, McCoy Elkhorn has the ability to process, store, and load coal for other regional coal producers for an agreed-to fee.

Additional Permits:

In addition to the above mines, McCoy Elkhorn holds 11 additional coal mining permits that are idled operations or in various stages of reclamation. For the idled coal mining operations, McCoy Elkhorn will determine which coal mines to bring back into production, if any, as the coal market changes, and there are currently no other idled mines within McCoy Elkhorn that are slated to go into production in the foreseeable future. Any idled mines that are brought into production would require significant upfront capital investment, and there is no assurance of the feasibility of any such new operations.

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Knott County Coal LLC

General:

Located primarily within Knott County, Kentucky (but with additional idled permits in Leslie County, Perry County, and Breathitt County, Kentucky), Knott County Coal is comprised of 22 idled mining permits (or permits in reclamation) and permits for one preparation facility: the idled Supreme Energy Preparation Plant. The idled mining permits are either in various stages of reclamation or being maintained as idled, pending any changes to the coal market that may warrant reinitiating production. The idled mines at Knott County Coal are primarily underground mines that utilize room-and-pillar mining. The coal controlled at Deane Mining (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

Mines:

Currently all permitted mines are idled, in development or in reclamation.

Processing & Transportation:

The idled Supreme Energy Preparation Plant is a 450 ton-per-hour coal preparation facility located in Kite, Kentucky. The Bates Branch rail loadout associated with the Supreme Energy Preparation Plant is a batch-weigh rail loadout with 110 rail car storage capacity and serviced by CSX Transportation in their Big Sandy rate district. The Supreme Energy Preparation Plant has a coarse refuse and slurry impoundment called the King Branch Impoundment.

The Supreme Energy Preparation Plant is owned by Knott County Coal, subject to certain restrictions present in the agreement between Knott County Coal and the surface land owner, Land Resources & Royalties LLC.

The Company acquired the Supreme Energy Preparation Plants as an idled facility, and since acquisition, no work has been performed at the facility other than minor maintenance. Both the Supreme Energy Preparation Plant and the rail loadout are idled and would require an undetermined amount of work and capital to bring them into operation. The allocated cost of for the property at Knott County Coal paid by the Company is $286,046.

Additional Permits:

In addition to the above mines, Knott County Coal holds 22 coal mining permits that are in development, idled or in various stages of reclamation. Any idled mines that are brought into production would require significant upfront capital investment and there is no assurance of the feasibility of any such new operations.

Deane Mining LLC

General:

Located within Letcher County and Knott County, Kentucky, Deane Mining is comprised of one idled underground coal mine (the Access Energy Mine), one idled surface mine (Razorblade Surface) and one idled coal preparation facility called Mill Creek Preparation Plant, along with 12 additional idled mining permits (or permits in reclamation). The idled mining permits are either in various stages of development, reclamation or being maintained as idled, pending any changes to the coal market that may warrant re-starting production. The coal controlled at Deane Mining (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

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Mines:

Access Energy is an underground mine in the Elkhorn 3 coal seam and located in Deane, Kentucky. Access Energy is mined via room-and-pillar mining methods using continuous miners, and the coal is belted directly from the mine to the raw coal stockpile at the Mill Creek Preparation Plant across the road from Access Energy. Access Energy is currently a “company run” mine, whereby the Company manages the workforce at the mine and pays all expenses of the mine. During 2019, the permit related to the Access Energy mine was idled and is not expected to produce again under the Company’s control due to the continued focused on the metallurgical and industrial markets.

Razorblade Surface is a surface mine targeting the Hazard 4 and Hazard 4 Rider coal seams and located in Deane, Kentucky. Deane Mining commenced mining activity at Razorblade Surface during the spring of 2018. Coal produced from Razorblade Surface is trucked approximately one mile to the Mill Creek Preparation Plant. Razorblade Surface is currently run as a contractor model for which the contractor is paid a fixed per-ton fee for the coal produced. During 2019, the permit related to the Access Energy mine was idled and is not expected to produce again under the Company’s control due to the continued focused on the metallurgical and industrial markets.

Processing & Transportation:

Coal from Access Energy is processed at Deane Mining’s Mill Creek Preparation Plant, an 800 ton-per hour coal preparation facility with a batch-weight loadout and rail spur for loading coal into trains for rail shipments. The spur has storage for 110 rail cars and is serviced by CSX Transportation and is located on both CSX’s Big Sandy rate district and CSX’s Elkhorn rate district. The Mill Creek Preparation Plant has a coarse refuse and slurry impoundment called Razorblade Impoundment.

Both the Mill Creek Preparation Plant and the rail loadout are operational, and any work required on any of the plant or loadouts would be routine maintenance. The allocated cost of for the property at Deane Mining paid by the Company is $1,569,641.

Additional Permits:

In addition to the above mines and preparation facility, Deane Mining holds 12 additional coal mining permits that are in development, idled or in various stages of reclamation. Any idled mines that are brought into production would require significant upfront capital investment and there is no assurance of the feasibility of any such new operations.

Wyoming County Coal LLC

General:

Located within Wyoming County, West Virginia, Wyoming County Coal is comprised of two idled underground mining permits and the three permits associated with the idled Pioneer Preparation Plant, the Hatcher rail loadout, and Simmons Fork Refuse Impoundment. The two idled mining permits are undisturbed underground mines that are anticipated to utilize room-and-pillar mining. The coal controlled at Wyoming County Coal (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” deposits under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

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Mines:

The mining permits held by Wyoming County Coal are in various stages of planning with no mines currently in production.

Potential customers of Wyoming County Coal would include steel mills in the United States or international marketplace although no definitive sales have been identified yet.

Processing & Transportation:

The idled Pioneer Preparation Plant is a 350 ton-per-hour coal preparation facility located near Oceana, West Virginia. The Hatcher rail loadout associated with the Pioneer Preparation Plant is a rail loadout serviced by Norfolk Southern Corporation. The refuse from the preparation facility is trucked to the Simmons Fork Refuse Impoundment, which is approximately 1.0 mile from the Pioneer Preparation facility. The preparation plant utilizes a belt press technology which eliminates the need for pumping slurry into a slurry pond for storage within an impoundment.

The Company is in the initial planning phase of getting estimates on the cost to upgrade the preparation facility to a modern 350 ton per hour preparation facility, although no cost estimates have yet been received. The Company is also in the initial planning phase of getting estimates on the cost and timing of upgrading the rail load out facility to a modern batch weight load out system, although no cost estimates have yet been received.

The Company acquired the Pioneer Preparation Plants as an idled facility, and since acquisition, no work has been performed at the facility. Both the Pioneer Preparation Plant and the rail loadout are idled and would require an undetermined amount of work and capital to bring them into operation, which is currently in the initial phases of planning and no cost estimates have been received. The allocated cost for the property at Wyoming County Coal will pay by the Company is $22,326,101 of which $22,091,688 has been paid using shares of the Company’s Class A Common stock. The remaining portion was paid in cash.

Permits:

Wyoming County Coal holds two coal mining permits that are in the initial planning phase and three permits associated with the idled Pioneer Preparation Plant, the Hatcher rail loadout, and Simmons Fork Refuse Impoundment. Any mine that is brought into production would require significant upfront capital investment and there is no assurance of the feasibility of any such new operations. As of the report date, the permits have not been fully transferred as they await final regulatory approval. As of the balance sheet date and report date, the West Virginia permit transfers have not yet been approved, and WCC has not substituted its reclamation surety bonds for the seller’s bond collateral. The transfer of any new permits to the Company is subject to regulatory approval. This approval is subject to the review of both unabated or uncorrected violations that are listed on the Applicator Violator List. The Company, to include several of its subsidiaries, does have unabated and/or uncorrected violations that are listed on the Applicator Violator List. Should the state regulators believe that the Company is not in the process of abating or correcting the currently outstanding issues associated with their currently held permits they may choose not to issue the Company any new permits until such issues are properly rectified.

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Perry County Resources LLC

General:

Located primarily within Perry County, Kentucky, Perry County Resources LLC is comprised of one active underground mine (the E4-2 mine) and one active coal processing facility called the Davidson Branch Preparation Plant, along with two additional idled underground mining permits. The two idled mining permits are for underground mines and have been actively mined in the past and being maintained as idled, pending any changes to the coal market that may warrant re-starting production. The coal controlled at Perry County Resources (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

Mines:

The E4-2 mine is an underground mine in the Elkhorn 4 (aka the Amburgy) coal seam located near the town of Hazard, Kentucky. The E4-2 mine is mined via room-and-pillar mining methods using both continuous miners and continuous haulage systems, and the coal is belted directly from the mine to the raw coal stockpile at the Davidson Branch Preparation Plant less than a mile away. The E4-2 mine is currently a “company-run” mine, whereby the Company manages the workforce at the mine and pays all expenses of the mine. The Company acquired the E4-2 mine as an active mine, and since acquisition in September 2019, the primary work at the E4-2 mine has been rehabilitation of existing infrastructure to increase the operational efficiencies of the mine, including replacing belt structure, repairing equipment, replacing underground mining infrastructure, and installing new mining infrastructure as the mine advances due to coal extraction. The E4-2 mine has the estimated capacity to produce up to approximately 80,000 tons per month of coal.

Mining operations at the E4-2 mine re-commenced on March 29, 2021 under updated licensing after being idled beginning in January 2020 due to the adverse market effects Covid-19 global pandemic.

Processing and Transportation:

The Davidson Branch Preparation Plant is a 1,300 ton-per-hour coal preparation facility located near Hazard, Kentucky. The associated “Bluegrass 4” rail loadout is a batch-weight rail loadout with 135 car storage capacity and services by CSX Transportation in their Hazard/Elkhorn rate district. The Davidson Branch Preparation Plant is owned by Perry County Resources. We are currently utilizing less than 10% of the available processing capacity of the Davidson Branch Preparation Plant.

Both the Davidson Branch Preparation Plant and the rail loadout are operational, and any work required on any of the plant or loadouts would be routine maintenance. The allocated cost of for the property at Perry County Resources paid by the Company is $1,954,317.

Additional Permits:

In addition to the above mine, preparation facility, and related permits, Perry County Resources holds four additional coal mining permits that are idled or in development. Any idled mines that are brought into production would require significant upfront capital investment and there is no assurance of the feasibility of any such new operations.

The transfer of any new permits to the Company is subject to regulatory approval. This approval is subject to the review of both unabated or uncorrected violations that are listed on the Applicator Violator List. The Company, to include several of its subsidiaries, does have unabated and/or uncorrected violations that are listed on the Applicator Violator List. Should the state regulators believe that the Company is not in the process of abating or correcting the currently outstanding issues associated with their currently held permits they may choose not to issue the Company any new permits until such issues are properly rectified.

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Quest Processing LLC

Quest Energy’s wholly-owned subsidiary, Quest Processing, manages the assets, operations, and personnel of the certain coal processing and transportation facilities of Quest Energy’s various other subsidiaries, namely the Supreme Energy Preparation Facility (of Knott County Coal LLC), the Raven Preparation Facility (of Knott County Coal LLC), and Mill Creek Preparation Facility (of Deane Mining LLC). Quest Processing LLC was the recipient of a New Markets Tax Credit loan that allowed for the payment of certain expenses of these preparation facilities. As part of that financing transaction, Quest Energy loaned ERC Mining LLC, an entity owned by members of Quest Energy, Inc.’s management, $4,120,000 to facilitate the New Markets Tax Credit loan, of which is all outstanding as of March 31, 2019. ERC Mining LLC is considered a variable interest entity and is consolidated into Quest Energy’s financial statements.

Mineral and Surface Leases

Coal mining and processing involves the extraction of coal (mineral) and the use of surface property incidental to such extraction and processing. All of the mineral and surface related to the Company’s coal mining operations is leased from various mineral and surface owners (the “Leases”). The Company’s operating subsidiaries, collectively, are parties to approximately 200 various Leases and other agreements required for the Company’s coal mining and processing operations. The Leases are with a variety of Lessors, from individuals to professional land management firms such as the Elk Horn Coal Company LLC and Alma Land Company. In some instances, the Company has leases with Land Resources & Royalties LLC (LRR), a professional leasing firm that is an entity wholly owned by Wabash Enterprises Inc, an entity owned by members of Quest Energy Inc.’s management.

Coal Sales

ARC sells its coal to domestic and international customers, some which blend ARC’s coal at east coast ports with other qualities of coal for export. Coal sales currently come from the Company’s Perry’s E4-2 mine. The Company may, at times, purchase coal from other regional producers to sell on its contracts.

Competition

The coal industry is intensely competitive. The most important factors on which the Company competes are coal quality, delivered costs to the customer and reliability of supply. Our principal domestic competitors will include Corsa Coal Corporation, Ramaco Resources, Blackhawk Mining, Coronado Coal, Arch Resources, Contura Energy, and Warrior Met Coal. Many of these coal producers may have greater financial resources and larger coal deposit bases than we do. We also compete in international markets directly with domestic companies and with companies that produce coal from one or more foreign countries, such as China, Australia, Colombia, Indonesia and South Africa.

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Legal Proceedings

From time to time, we are subject to ordinary routine litigation incidental to our normal business operations.

Please see financial statement note 6 for detail on cases.

Environmental, Governmental, and Other Regulatory Matters

Our operations are subject to federal, state, and local laws and regulations, such as those relating to matters such as permitting and licensing, employee health and safety, reclamation and restoration of mining properties, water discharges, air emissions, plant and wildlife protection, the storage, treatment and disposal of wastes, remediation of contaminants, surface subsidence from underground mining and the effects of mining on surface water and groundwater conditions. In addition, we may become subject to additional costs for benefits for current and retired coal miners. These environmental laws and regulations include, but are not limited to, the Surface Mining Control and Reclamation Act of 1977 (SMCRA) with respect to coal mining activities and ancillary activities; the Clean Air Act (CAA) with respect to air emissions; the Clean Water Act (CWA) with respect to water discharges and the permitting of key operational infrastructure such as impoundments; Resource Conservation and Recovery RCRA with respect to solid and hazardous waste management and disposal, as well as the regulation of underground storage tanks; the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) with respect to releases, threatened releases and remediation of hazardous substances; the Endangered Species Act of 1973 (ESA) with respect to threatened and endangered species; and the National Environmental Policy Act of 1969 (NEPA) with respect to the evaluation of environmental impacts related to any federally issued permit or license. Many of these federal laws have state and local counterparts which also impose requirements and potential liability on our operations.

Compliance with these laws and regulations may be costly and time-consuming and may delay commencement, continuation or expansion of exploration or production at our facilities. They may also depress demand for our products by imposing more stringent requirements and limits on our customers’ operations. Moreover, these laws are constantly evolving and are becoming increasingly complex and stringent over time. These laws and regulations, particularly new legislative or administrative proposals, or judicial interpretations of existing laws and regulations related to the protection of the environment could result in substantially increased capital, operating and compliance costs. Individually and collectively, these developments could have a material adverse effect on our operations directly and/or indirectly, through our customers’ inability to use our products.

Certain implementing regulations for these environmental laws are undergoing revision or have not yet been promulgated. As a result, we cannot always determine the ultimate impact of complying with existing laws and regulations.

Due in part to these extensive and comprehensive regulatory requirements and ever-changing interpretations of these requirements, violations of these laws can occur from time to time in our industry and also in our operations. Expenditures relating to environmental compliance are a major cost consideration for our operations and safety and compliance is a significant factor in mine design, both to meet regulatory requirements and to minimize long-term environmental liabilities. To the extent that these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, operating results will be reduced.

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In addition, our customers are subject to extensive regulation regarding the environmental impacts associated with the combustion or other use of coal, which may affect demand for our coal. Changes in applicable laws or the adoption of new laws relating to energy production, greenhouse gas emissions and other emissions from use of coal products may cause coal to become a less attractive source of energy, which may adversely affect our mining operations, the cost structure and, the demand for coal.

We believe that our competitors with operations in the United States are confronted by substantially similar conditions. However, foreign producers and operators may not be subject to similar requirements and may not be required to undertake equivalent costs in or be subject to similar limitations on their operations. As a result, the costs and operating restrictions necessary for compliance with United States environmental laws and regulations may have an adverse effect on our competitive position with regard to those foreign competitors. The specific impact on each competitor may vary depending on a number of factors, including the age and location of its operating facilities, applicable legislation and its production methods.

The Mine Act and the MINER Act, and regulations issued under these federal statutes, impose stringent health and safety standards on mining operations. The regulations that have been adopted under the Mine Act and the MINER Act are comprehensive and affect numerous aspects of mining operations, including training of mine personnel, mining procedures, roof control, ventilation, blasting, use and maintenance of mining equipment, dust and noise control, communications, emergency response procedures, and other matters. The Mine Safety and Health Administration (MSHA) regularly inspects mines to ensure compliance with regulations promulgated under the Mine Act and MINER Act.

Due to the large number of mining permits held by the Company that have been previously mined and operated, there is a significant amount of environmental reclamation and remediation required by the Company to comply with local, state, and federal regulations for coal mining companies.

Property

Our principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038. We pay $5,726 per month in rent for the office space and the rental lease expires December 2026. We also rent office space from an affiliated entity, LRR, at 11000 Highway 7 South, Kite, Kentucky 41828 and pay $500 per month rent and the rental lease expires October 30, 2021.

The Company also utilizes various office spaces on-site at its coal mining operations and coal preparation plant locations in eastern Kentucky, with such rental payments covered under any surface lease contracts with any of the surface land owners.

Employees

ARC, through its operating subsidiaries, employs a combination of company employees and contract labor to mine coal, process coal, and related functions. The Company is continually evaluating the use of company employees and contract labor to determine the optimal mix of each, given the needs of the Company. Currently, PCR’s E-42 mine is run by contract labor, and the Company’s various coal preparation facilities are run by contract labor.

The Company currently has approximately 11 employees, with a substantial majority based in eastern Kentucky. The Company is headquartered in Fishers, Indiana with six members of the Company’s executive team based at this location.

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Results of Operations

Our consolidated operations had operating revenues of $10,646 for the three-months ended March 31, 2021 and $524,334 operating revenue for the three-months ended March 31, 2020. We have incurred net loss attributable to American Resources shareholders in the amount of $6,389,857 and a net loss of $3,261,368 respectively for the same periods.

The primary driver for decrease in revenue was a decrease in coal production during the Covid-19 global pandemic.

From our inception to-date our activities have been primarily financed from the proceeds of our acquisitions, common share equity investments and loans.

For the three months ended March 31, 2021 and 2020, coal sales and processing expenses were $800,515 and $1,855,187 respectively, development costs, including loss on settlement of ARO were $1,811,951 and $128,159, respectively, and production taxes and royalties $568,182 and $160,230, respectively. Depreciation expense for the three months ended March 31, 2021 and 2020 were $393,530 and $915,052 respectively.

Liquidity and Capital Resources

As of March 31, 2021, and 2020, our available cash was $7,097,465 and $43,745. We expect to fund our liquidity requirements with cash on hand, future borrowings and cash flow from operations. If future cash flows are insufficient to meet our liquidity needs or capital requirements, we may reduce our mine development and/or fund a portion of our expenditures through issuance of debt or equity securities, the entry into debt arrangements for from other sources, such as asset sales. We do not have any credit lines currently available to fund our liquidity requirements, and currently there is uncertainty regarding our ability to execute on the above strategy.

For the three months ending March 31, 2021 our net cash flow provided by operating activities was $852,392 and for the period ending March 31, 2020 the net cash flow used in operating activities was $852,392 .

For the three months ending March 31, 2021 and 2020 net cash provided by (used in) investing activities were $(408,915) and $(408,915) respectively.

For the three months ending March 31, 2021 and 2020 net cash proceeds (used in) from financing activities were $(253,056) and $(253,056) respectively.

As a public company, we will be subject to certain reporting and other compliance requirements of a publicly reporting company. We will be subject to certain costs for such compliance which private companies may not choose to make. We have identified such costs as being primarily for audits, legal services, filing expenses, financial and reporting controls and shareholder communications and estimate the cost to be approximately $35,000 monthly if the activities of our Company remain somewhat the same for the next few months. We have included such costs in our monthly cash flow needs and expect to pay such costs from a combination of cash from operations.

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Business Effect of Covid-19

During 2020, the worldwide COVID-19 outbreak has resulted in muted demand for infrastructure and steel products and their necessary inputs including Metallurgical coal. These recent developments are expected to result in lower sales and gross margins. Because of the adverse market conditions caused by the global pandemic the Company’s operations were idled in January 2020 and remained idled through March 29, 2021.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.

Critical Accounting Policies

The preparation of financial statements requires management to utilize estimates and make judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. These estimates are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. The estimates are evaluated by management on an ongoing basis, and the results of these evaluations form a basis for making decisions about the carrying value of assets and liabilities that are not readily apparent from other sources. Although actual results may differ from these estimates under different assumptions or conditions, management believes that the estimates used in the preparation of our financial statements are reasonable. The critical accounting policies affecting our financial reporting are summarized in Note 1 to the financial statements included elsewhere in this report.

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Recent Accounting Pronouncements

None.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Because we are a smaller reporting company, we are not required to include any disclosure under this item.

Item 4. Controls and Procedures

(a) Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

With respect to the period ending March 31, 2021, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.

Based upon our evaluation regarding the period ending March 31, 2021, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s insufficient number of staff performing accounting and reporting functions and lack of timely reconciliations. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

(b) Changes in Internal Controls.

There have been no changes in the Company’s internal control over financial reporting during the period ended March 31, 2021 that have materially affected the Company’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are subject to ordinary routine litigation incidental to our normal business operations.

Please see financial statement note 6 for detail on cases.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On March 17, 2021, 425,000 of restricted common shares were sold. Gross proceeds to the company amounted to $1,275,000 which were used for general business purposes.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Quarterly Report.

Item 5. Other Information

None.

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Item 6. Exhibits

The following exhibits are filed herewith except as otherwise noted:

Exhibit Number	Description	Location Reference

3.1	Articles of Incorporation of Natural Gas Fueling and Conversion Inc.	Incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, filed with the SEC on November 27, 2013.
3.2	Amended and Restated Articles of Incorporation of NGFC Equities Inc.	Incorporated herein by reference to Exhibit 3.1 to the Company’s 8k filed on February 25, 2015.
3.3	Articles of Amendment to Articles of Incorporation of NGFC Equities, Inc.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Form 8-K on February 21, 2017.
3.4	Articles of Amendment to Articles of Incorporation of American Resources Corporation dated March 21, 2017.	Incorporated herein by reference to Exhibit 3.4 to the Company’s Form 10-Q, filed with the SEC on February 20, 2018.
3.5	Bylaws of Natural Gas Fueling and Conversion Inc.	Incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1, filed with the SEC on November 27, 2013.
3.6	Bylaws, of NGFC Equities Inc., as amended and restated.	Incorporated herein by reference to Exhibit 3.2 to the Company’s 8k filed on February 25, 2015.
3.7	Articles of Amendment to Articles of Incorporation of American Resources Corporation dated November 8, 2018.	Filed as Exhibit 99.1 to the Company’s 8k filed on November 13, 2018, incorporated herein by reference.
3.8	Bylaws of American Resources Corporation, as amended and restated	Incorporated herein by reference to Exhibit 99.2 to the Company’s 8k filed on November 13, 2018.
4.1	Common Stock Purchase Warrant “B-4” dated October 4, 2017	Incorporated herein by reference to Exhibit 4.1 to the Company’s 8k filed on October 11, 2017.
4.2	Common Stock Purchase Warrant “C-1” dated October 4, 2017	Incorporated herein by reference to Exhibit 4.2 to the Company’s 8k filed on October 11, 2017.
4.3	Common Stock Purchase Warrant “C-2” dated October 4, 2017	Incorporated herein by reference to Exhibit 4.3 to the Company’s 8k filed on October 11, 2017.
4.4	Common Stock Purchase Warrant “C-3” dated October 4, 2017	Incorporated herein by reference to Exhibit 4.4 to the Company’s 8k filed on October 11, 2017.
4.5	Common Stock Purchase Warrant “C-4” dated October 4, 2017	Incorporated herein by reference to Exhibit 4.5 to the Company’s 8k filed on October 11, 2017.
4.6	Promissory Note for $600,000.00 dated October 4, 2017	Incorporated herein by reference to Exhibit 4.6 to the Company’s 8k filed on October 11, 2017.
4.7	Promissory Note for $1,674,632.14 dated October 4, 2017	Incorporated herein by reference to Exhibit 4.7 to the Company’s 8k filed on October 11, 2017.
4.8	Loan Agreement for up to $6,500,000 dated December 31, 2018	Incorporated herein by reference to Exhibit 99.1 to the Company’s 8k filed on January 3, 2019.
4.9	Promissory Note for up to $6,500,000 dated December 31, 2018	Incorporated herein by reference to Exhibit 99.2 to the Company’s 8k filed on January 3, 2019.
10.1	Secured Promissory Note	Incorporated herein by reference to Exhibit 99.1 to the Company’s 8k filed on May 15, 2018.
10.2	Security Agreement	Incorporated herein by reference to Exhibit 99.2 to the Company’s 8k filed on May 15, 2018.
10.3	Pledge Agreement	Incorporated herein by reference to Exhibit 99.3 to the Company’s 8k filed on May 15, 2018.
10.4	Guaranty Agreement	Incorporated herein by reference to Exhibit 99.4 to the Company’s 8k filed on May 15, 2018.
10.5	Bill of Sale	Incorporated herein by reference to Exhibit 99.5 to the Company’s 8k filed on May 15, 2018.
10.6	Sublease Agreement Between Colonial Coal Company, Inc. and McCoy Elkhorn Coal LLC	Incorporated herein by reference to Exhibit 99.1 to the Company’s 8k filed on May 1, 2018
10.7	Interim Operating Agreement	Incorporated herein by reference to Exhibit 99.2 to the Company’s 8k filed on May 1, 2018
10.8	Consolidated and Restated Loan and Security Agreement dated October 4, 2017	Incorporated herein by reference to Exhibit 10.1 to the Company’s 8k filed on October 11, 2017
10.9	Asset Purchase Agreement between Wyoming County Coal LLC and Thomas Shelton dated November 7, 2018	Incorporated herein by reference to Exhibit 10.9 to the Company’s registration statement filed on December 11, 2018.

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10.10	Asset Purchase Agreement between Wyoming County Coal LLC and Synergy Coal, LLC dated November 7, 2018	Incorporated herein by reference to Exhibit 10.10 to the Company’s registration statement filed on December 11, 2018.
10.11	Security Agreement	Incorporated herein by reference to Exhibit 99.3 to the Company’s 8k filed on January 3, 2019.
10.12	Purchase Order	Incorporated herein by reference to Exhibit 99.4 to the Company’s 8k filed on January 3, 2019.
10.13	Employment Agreement with Mark C. Jensen	Incorporated herein by reference to Exhibit 10.13 to the Company’s registration statement filed on February 6, 2019.
10.14	Employment Agreement with Thomas M. Sauve	Incorporated herein by reference to Exhibit 10.14 to the Company’s registration statement filed on February 6, 2019.
10.15	Employment Agreement with Kirk P. Taylor	Incorporated herein by reference to Exhibit 10.15 to the Company’s registration statement filed on February 6, 2019.
10.16	Employee Stock Option Plan	Incorporated herein by reference to Exhibit 10.16 to the Company’s registration statement filed on February 6, 2019.
10.17	Letter of Intent	Incorporated herein by reference to Exhibit 10.17 to the Company’s registration statement filed on February 6, 2019.
10.18	Merger Agreement with Colonial Coal	Incorporated herein by reference to Exhibit 10.18 to the Company’s registration statement filed on February 14, 2019.
10.19	Share Exchange Agreement to replace Merger Agreement with Colonial Coal	Incorporated herein by reference to Exhibit 10.19 to the Company’s registration statement filed on February 14, 2019.
14.1	Code of Conduct	Incorporated herein by reference to Exhibit 99.2 to the Company’s 8k filed on November 13, 2018.
14.2	Financial Code of Ethics	Incorporated herein by reference to Exhibit 99.3 to the Company’s 8k filed on November 13, 2018.
21.1	Subsidiaries of the Registrant	Filed Herewith
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed Herewith
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed Herewith
95.1	Mine Safety Disclosure pursuant to Regulation S-K, Item 104	Filed Herewith

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AMERICAN RESOURCES CORPORATION

Date: May 12, 2021	By:	/s/ Mark C. Jensen
	Name:	Mark C. Jensen
	Title:	CEO, Chairman of the Board
		(Principal Executive Officer)

American Resources Corp - FORM 10-Q - May 12, 2021

Attached files

American Resources Corp Reports