CORRECTION OF PRIOR YEAR INFORMATION

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

NOTE 7 - CORRECTION OF PRIOR YEAR INFORMATION

During the audit of the Company’s consolidated financial statements for the year ended December 31, 2018, the Company identified an error in the formula used to calculate the initial asset retirement obligation of Deane, McCoy and KCC. The formulaic error initially resulted in the overstated long-term assets and long term liabilities for the year ended December 31, 2015, 2016 and 2017. During the year ended December 31, 2016 and 2017, accretion and depreciation expenses were overstated causing an understatement of retained earnings.

This resulted in an adjustment to the previously reported amounts in the financial statements of the Company for the three-month period ended March 31, 2018. In accordance with the SEC’s Staff Accounting Bulletin Nos. 99 and 108 (SAB 99 and SAB 108), the Company evaluated this error and, based on an analysis of quantitative and qualitative factors, determined that the error was immaterial to the prior reporting periods affected.

However, if the adjustments to correct the cumulative effect of the above error had been recorded in the three months ended March 31, 2018, the Company believes the impact would have been significant and would impact comparisons to prior periods. Therefore, as permitted by SAB 108, the Company corrected, in the current filing, previously reported results of the Company as of March 31, 2018.

The following table presents the impact of the correction in the financial statements as of March, 31, 2018:

Balance Sheet	As of March 31, 2018
	As Previously
	Reported			Adjustment			As Adjusted
Assets
Total Current Assets	$	3,068,478		$	-		$	3,068,478
Cash - restricted		85,786			-			85,786
Processing and Rail Facility		2,914,422			(279,647	)		2,634,775
Underground Equipment		8,887,045			(1,633,897	)		7,253,148
Surface Equipment		4,439,263			(1,126,208	)		3,313,055
Less Accumulated Depreciation		(5,300,140	)		933,850			(4,366,290	)
Land		178,683			-			178,683
Accounts Receivable - Other		111,003			-			111,003
Note Receivable		4,117,139			-			4,117,139
Total Assets	$	18,501,679		$	(2,105,902	)	$	16,395,777
Liabilities and Shareholders' deficit
Total Current Liabilities	$	37,459,392		$	-		$	37,459,392
Long-term portion of note payables		5,782,253			-			5,782,253
Reclamation liability	$	17,964,267			(5,004,103	)		12,960,164
Total Liabilities	$	61,205,912			(5,004,103	)	$	56,201,809
Class A Common stock		89			-			89
Series A Preferred stock		482			-			482
Series B Preferred stock		850			-			850
APIC		1,527,254			-			1,527,254
Accumulated Deficit		(44,759,278	)		2,898,201			(41,861,077	)
Total American Resources Corporation Shareholders’ Equity		(43,230,603	)		2,898,201			(40,332,402	)
Non Controlling Interest		526,370			-			526,370
Total Liabilities and Shareholders’ Deficit		18,501,679		$	(2,105,902	)		16,395,777

Income Statement	As of March 31, 2018
	As Previously
	Reported			Adjustment			As Adjusted
Revenue
Total Revenue	$	7,325,376		$	-		$	7,325,376
Cost of Coal Sales and Processing		(5,473,428	)		-			(5,473,428	)
Accretion Expense		(447,762	)		106,181			(341,581	)
Depreciation		(479,571	)		(135,818	)		(615,389	)
General and Administrative		(476,589	)		-			(476,589	)
Professional Fees		(274,603	)		-			(274,603	)
Production Taxes and Royalties		(949,793	)		-			(949,793	)
Development Costs		(1,687,173	)		-			(1,687,173	)
Net Loss from Operations	$	(2,463,543	)	$	(29,637	)	$	(2,493,180	)
Other Expense, net		(77,469	)		-			(77,469	)
Net Loss	$	(2,541,012	)	$	(29,637	)	$	(2,570,649	)
Less:  Preferred dividend requirement		(70,157	)		-			(70,157	)
Less:  Net income attributable to Non Controlling Interest		(128,514	)		-			(128,514	)
Net loss attributable to American Resources Corporation Shareholders	$	(2,739,683	)	$	(29,637	)	$	(2,769,320	)

Statement of Cash Flow	As of March 31, 2018
	As Previously
	Reported			Adjustment			As Adjusted
Cash Flows from Operating activities:
Net loss	$	(2,541,012	)	$	(29,637	)	$	(2,570,649	)
Adjustments to reconcile net loss to net cash
Depreciation		479,571			135,818			615,389
Accretion expense		447,762			(106,181	)		341,581
Amortization of debt discount and issuance costs		37,841			-			37,841
Recovery of advances receivable		(50,806	)		-			(50,806	)
	$	(1,626,644	)	$	-		$	(1,626,644	)
Change in current assets and liabilities		567,359			-			567,359
Cash used in operating activities	$	(1,059,285	)		-		$	(1,059,285	)
Cash provided by investing activities		72,219			-			72,219
Cash provided by financing activities		696,193			-			696,193
Decrease in cash and restricted cash		(290,873	)		-			(290,873	)
Cash and restricted cash, beginning of year		385,665			-			385,665
Cash and restricted cash, end of year	$	94,792		$	-		$	94,792