10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: September 30, 2019

or

¨ 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.)

9002 Technology Lane

Fishers, IN 46038

(Address and Zip Code of principal executive offices)

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common	AREC	NASDAQ Capital Market

Indicate by check mark whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x 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 x 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	x	Smaller Reporting Company	x
Emerging growth company	x

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 x

As of November 15, 2019, the registrant had 27,337,435 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 for the Three and Nine Months ended September 30, 2019 and 2018 (Unaudited)		5
	Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Nine Months ended September 30, 2019 and 2018 (unaudited)		6
	Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2019 and 2018 (Unaudited)		9
	Notes to Unaudited Consolidated Financial Statements		10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		37
Item 4.	Controls and Procedures		37
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		38
Item 1A.	Risk Factors		38
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds		38
Item 3.	Defaults upon Senior Securities		38
Item 4.	Mine Safety Disclosures		38
Item 5.	Other Information		38
Item 6.	Exhibits		39
SIGNATURES			41

2

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

AMERICAN RESOURCES CORPORATION

CONSOLIDATED

FINANCIAL STATEMENTS

(UNAUDITED)

For the three months and nine months ended

September 30, 2019

3

AMERICAN RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS

UNAUDITED

	September 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS
Cash	$	716,840		$	2,293,107
Accounts Receivable		71,580			1,338,680
Inventory		1,004,326			163,800
Prepaid fees		483,000			147,826
Accounts Receivable - Other		336,800			319,548
Total Current Assets		2,612,546			4,262,961
OTHER ASSETS
Cash - restricted		297,987			411,692
Processing and rail facility		14,496,487			11,630,171
Underground equipment		10,155,915			8,717,229
Surface equipment		3,224,896			3,101,518
Acquired mining rights		28,831,440			2,913,241
Coal refuse storage		12,171,271			11,993,827
Less Accumulated Depreciation		(11,320,116	)		(6,691,259	)
Land		3,248,169			907,193
Note Receivable		4,117,139			4,117,139
Total Other Assets		65,223,188			37,100,751
TOTAL ASSETS	$	67,835,734		$	41,363,712
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	7,483,079		$	8,139,662
Accounts payable – related party		639,180			474,654
Accrued interest		1,977,142			1,118,736
Funds held for others		-			79,662
Due to affiliate		132,639			124,000
Current portion of long term-debt (net of issuance costs and debt discount of $0 and $134,296)		14,691,696			14,169,139
Current portion of convertible debt		7,219,612			-
Current portion of reclamation liability		2,327,169			2,327,169
Total Current Liabilities		34,470,517			26,433,022
OTHER LIABILITIES
Long-term portion of note payable (net of issuance costs of $420,062 and $428,699)		4,829,330			7,918,872
Reclamation liability		21,425,097			16,211,640
Total Other Liabilities		26,254,427			24,134,512
Total Liabilities		60,724,944			50,563,534
STOCKHOLDERS’ EQUITY (DEFICIT)
AREC - Class A Common stock: $.0001 par value; 230,000,000 shares authorized, 27,267,197 and 17,763,469 shares issued and outstanding, respectively		2,726			1,776
AREC - Series A Preferred stock: $.0001 par value; 5,000,000 shares authorized, 0 and 481,780 shares issued and outstanding, respectively		-			48
AREC - Series C Preferred stock: $.001 par value; 20,000,000 shares authorized, 0 and 50,000 shares issued and outstanding, respectively		-			5
Additional paid-in capital		90,094,006			42,913,532
Accumulated deficit		(82,985,942	)		(52,115,183	)
Total American Resources Corporation’s Stockholders’ Equity (Deficit)
Total Stockholders’ Deficit		7,110,790			(9,199,822	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	67,835,734		$	41,363,712

The accompanying footnotes are integral to the unaudited consolidated financial statements

4

AMERICAN RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

	Three Months September 30, 2019			Three Months September 30, 2018 As Restated			Nine Months September 30, 2019			Nine Months September 30, 2018 As Restated
Coal Sales	$	1,847,279		$	8,890,322		$	18,162,805		$	23,219,222
Processing Services Income		-			147,946			20,876			167,462
Total Revenue		1,847,279			9,038,268			18,183,681			23,386,684
Cost of Coal Sales and Processing		(2,956,306	)		(7,116,009	)		(15,254,961	)		(18,214,195	)
Accretion Expense		(320,900	)		(433,589	)		(962,699	)		(1,116,751	)
Depreciation		(1,414,942	)		(700,595	)		(3,036,747	)		(1,931,374	)
Amortization of mining rights		(252,729	)		(181,385	)		(1,592,110	)		(181,385	)
General and Administrative		(1,434,545	)		(2,320,287	)		(3,798,051	)		(3,892,596	)
Professional Fees		(170,937	)		(707,735	)		(5,136,767	)		(1,106,864	)
Production Taxes and Royalties		(948,148	)		(759,269	)		(2,811,691	)		(2,217,156	)
Development Costs		(1,425,024	)		(945,341	)		(5,912,589	)		(3,429,512	)
Total Operating Expenses		(8,923,531	)		(13,164,210	)		(38,505,615	)		(32,089,833	)
Net Loss from Operations		(7,076,252	)		(4,125,942	)		(20,321,934	)		(8,703,149	)
Other Income		770,405			875,942			1,251,359			1,295,065
Gain on cancelation of debt		-			-			-			315,000
Loss on settlement of payable		-			-			(22,660	)
Receipt of previously impaired receivable		-			-			-			92,573
Amortization of debt discount and issuance costs		(219,218	)		-			(7,722,197	)		-
Interest Income		82,343			-			164,686			41,171
Warrant Modification Expense		-			-			(2,545,360	)		-
Interest expense		(901,810	)		(305,655	)		(1,674,653	)		(864,104	)
Total Other income (expense)		(268,280	)		570,287			(10,548,825	)		879,705
Net Loss		(7,344,532	)		(3,555,655	)		(30,870,759	)		(7,823,444	)
Less: Series B dividend requirement		-			(17,000	)		-			(104,157	)
Less: Net income attributable to Non Controlling Interest		-			-			-			(151,278	)
Net loss attributable to American Resources Corporation Shareholders	$	(7,344,532	)	$	(3,572,655	)	$	(30,870,759	)	$	(8,078,879	)
Net loss per common share - basic and diluted	$	(0.30	)	$	(3.44	)	$	(1.34	)	$	(8.58	)
Weighted average common shares outstanding		24,886,763			1,038,783			23,025,762			941,495

The accompanying footnotes are integral to the unaudited consolidated financial statements

5

AMERICAN RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD FROM JANAURY 1, 2019 THROUGH SEPTEMBERE 30, 2019 AND JANAURY 1, 2018 THROUGH SEPTEMBER 30, 2018

UNAUDITED

	Common Shares				Preferred Series A						Preferred Series C									Accumulated			Non-controlling
	Shares		Amount		Shares			Amount			Shares			Amount			APIC			Deficit			Interest		Total
Balance December 31, 2018		17,763,469	$	1,776		481,780		$	48			50,000		$	5		$	42,913,532		$	(52,115,183	)	$	-	$	(9,199,822	)
Issuance of common shares for cash, net		1,170,200		117		-			-			-			-			4,253,883			-			-		4,254,000
Issuance of common shares for services		159,000		16		-			-			-			-			1,672,184			-			-		1,672,200
Issuance of common shares for asset acquisition		2,000,000		200		-			-			-			-			24,399,800			-			-		24,400,000
Issuance of common shares for conversion of debt and accounts payable		4,417		-		-			-			-			-			49,161			-			-		49,161
																										-
Issuance of warrants to consultants		-		-		-			-			-			-			2,385,000			-			-		2,385,000
Stock option expense		-		-		-			-			-			-			68,693			-			-		68,693
Issuance of common shares for warrant exercise		599,427		60		-			-			-			-			(60	)		-			-		-
Conversion of Series A Preferred into common stock		1,605,934		161		(481,780	)		(48	)		-			-			(113	)		-			-		-
Conversion of Series C into common stock		13,750		1		-			-			(50,000	)		(5	)		4			-			-		-
Beneficial conversion on note payable due to modification		-		-		-			-			-			-			7,362,925			-			-		7,362,925
Net loss		-		-		-			-			-			-			-			(14,565,185	)		-		(14,565,185	)
Balance March 31, 2019		23,316,197		2,331		-			-			-			-			83,105,009			(66,680,368	)		-		16,426,972

 

6

Issuance of common shares for cash, net	25,000			3		-		-	-		-		99,997		-			-		100,000
Issuance of common shares for services	58,000			6		-		-	-		-		133,834		-			-		133,840
Issuance of warrants to consultants	-			-		-		-	-		-		139,500		-			-		139,500
Issuance of common shares for conversion of accounts payable	50,000			5		-		-	-		-		182,495		-			-		182,500
Common shares issued in connection with note payable	25,000			3		-		-	-		-		87,247		-			-		87,250
Stock option expense	-			-		-		-	-		-		73,603		-			-		73,603
Cancellation of common shares	(107,000	)		(11	)	-		-	-		-		11		-			-		-
Warrant modification Expense	-			-		-		-	-		-		2,545,360		-			-		2,545,360
Net loss	-			-		-		-	-		-		-		(8,961,042	)		-		(8,961,042	)
Balance June 30, 2019	23,367,197			2,337		-		-	-		-		86,367,056		(75,641,410	)		-		10,727,983
Issuance of common shares and warrants issued for public offering, net	3,600,000			359		-		-	-		-		3,409,241		-			-		3,409,600
Common shares issued in connection with note payable	300,000			30		-		-	-		-		210,551		-			-		210,581
Underwriter Warrants	-			-		-		-	-		-		4,098		-			-		4,098
Stock option expense	-			-		-		-	-		-		103,060		-			-		103,060
Net loss	-			-		-		-	-		-		-		(7,344,532	)		-		(7,344,5432	)
Balance September 30, 2019	27,267,197		$	2,726		-	$	-	-	$	-	$	90,094,006	$	(82,985,942	)	$	-	$	7,110,790

The accompanying footnotes are integral to the unaudited consolidated financial statements

7

	Common Shares				Preferred Series A				Preferred Series C						Accumulated			Non-controlling
	Shares		Amount		Shares		Amount		Shares		Amount		APIC		Deficit			Interest			Total
Balance December 31, 2017		892,044	$	89		4,817,792	$	482		850,000	$	850	$	1,527,254	$	(39,091,757	)	$	397,856		$	(37,165,226	)
Series Preferred B Dividend Requirement		-		-		-		-		-		-		-		(70,157	)		-			(70,157	)
Net loss		-		-		-		-		-		-		-		(2,699,163	)		128,514			(2,570,649	)
Balance March 31, 2018		892,044		89		4,817,792		482		850,000		850		1,527,254		(41,861,077	)		526,370			(39,806,032	)
Series Preferred B Dividend Requirement		-		-		-		-		-		-		-		(17,000	)		-			(17,000	)
Forgiveness of accrued management fee		-		-		-		-		-		-		17,840,615		-			-			17,840,615
Net loss		-		-		-		-		-		-		-		(1,719,902	)		22,764			(1,697,138	)
Balance June 30, 2018		892,044		89		4,817,792		482		850,000		850		19,367,869		(43,597,979	)		549,134			(23,679,555	)
Issuance of Common Shares for Services		300,000		29		-		-		-		-		201,221		-			-			201,250
Warrants issued for services		-		-		-		-		-		-		234,067		-			-			234,067
Option Expense		-		-		-		-		-		-		13,410		-			-			13,410
Series Preferred B Dividend Requirement		-		-		-		-		-		-		-		(17,000	)		-			(17,000	)
Consolidation of VIE		-		-		-		-		-		-		-		-			(549,134	)		(549,134	)
Net loss		-		-		-		-		-		-		-		(3,555,655	)		-			(3,555,655	)
Balance September 30, 2018		1,192,044	$	118		4,817,792	$	482		850,000	$	850	$	19,816,567	$	(47,170,634	)	$	-		$	(27,352,617	)

The accompanying footnotes are integral to the unaudited consolidated financial statements

8

AMERICAN RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

	For the Nine Months September 30, 2019			For the Nine Months September 30, 2018 As Restated
Cash Flows from Operating activities:
Net loss	$	(30,870,759	)	$	(7,823,444	)
Adjustments to reconcile loss to net cash
Depreciation		3,036,747			1,931,374
Amortization of mining rights		1,592,110			181,385
Accretion expense		962,699			1,116,751
Cancelation of debt		-			(315,000	)
Gain on disposition		-			(807,591	)
Recovery of previously impaired receipts		(50,806	)		(92,573	)
Amortization of debt discount		7,722,197			420,134
Warrant expense		2,528,598			234,067
Warrant modification expense		2,545,360			-
Option expense		245,356			13,410
Issuance of common shares for services		1,806,040			201,250
Change in current assets and liabilities:
Accounts receivable		1,300,654			(930,478	)
Inventory		(840,526	)		188,371
Prepaid expenses and other assets		(335,174	)		(147,826	)
Accounts payable		(2,274,582	)		973,057
Funds held for others		(79,662	)		(19,061	)
Due to affiliates		164,526			512,378
Accrued interest		858,406			287,639
Cash used in operating activities		(11,688,816	)		(4,076,157	)
Cash Flows from Investing activities:
Advances made in connection with management agreement		-			(99,582	)
Advance repayment in connection with management agreement		-			222,304
Cash paid for PPE, net		(327,250	)		(127,957	)
Cash received in asset acquisitions		650,000			-
Cash provided by (used in) investing activities		322,750			(5,235	)
Cash Flows from Financing activities:
Principal payments on long term debt		(2,548,111	)		(2,064,902	)
Proceeds from long term debt		5,139,399			5,316,977
Proceeds from convertible debt		399,980			-
Proceeds from related party		8,639			-
Net proceeds from (payments to) factoring agreement		(1,087,413	)		787,434
Sale of common stock for cash in connection with public offering		4,354,000			-
Sale of common stock for cash issued with warrants in connection with public offering		3,409,600			-
Cash provided by financing activities		9,676,094			4,039,509
Decrease in cash and restricted cash		(1,689,972	)		(41,883	)
Cash and restricted cash, beginning of period		2,704,799			385,665
Cash and restricted cash, end of period	$	1,014,827		$	343,782
Supplemental Information
Cash paid for interest	$	389,437		$	156,331
Cash paid for income taxes	$	-		$	-
Non-cash investing and financing activities
Shares issued in asset acquisition	$	24,400,000		$	-
Assumption of net assets and liabilities for asset acquisitions	$	8,787,748		$	2,217,952
Equipment for notes payable	$	-		$	906,660
Conversion of accounts payable into common shares	$	231,661		$	-
Beneficial Conversion Feature on note payable due to modification	$	7,362,925		$	-
Preferred Series B dividends	$	-		$	104,157
Shares issued in connection with note payable	$	297,831		$	-
Conversion of Series A Preferred into common shares	$	161		$	-
Conversion of Series C Preferred into common shares	$	1		$	-
Return of shares related to employee settlement	$	11		$	-
Forgiveness of accrued management fee	$	-		$	17,840,615
Warrant exercise for common shares	$	60		$	-

The accompanying footnotes are integral to the unaudited consolidated financial statements

9

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 acquired in 2016 and 2015 for the purpose of acquiring, rehabilitating and operating various natural resource assets including coal, oil and natural gas.

Basis of Presentation and Consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Quest Energy Inc, (QEI), Deane Mining, LLC (Deane), Quest Processing LLC (Quest Processing), ERC Mining Indiana Corp (ERC), McCoy Elkhorn Coal LLC (McCoy), Wyoming County Coal LLC (WCC), Knott County Coal LLC (KCC), Empire Kentucky Land, Inc, Colonial Coal Company, Inc. (Empire) and Perry County Resources LLC (PCR). All significant intercompany accounts and transactions have been eliminated.

On February 12, 2019, ARC Acquisition Corporation (ARCAC) was formed as a wholly owned subsidiary of ARC. On February 12, 2019, ARCAC merged with Empire Kentucky Land, Inc which is the 100% owner of Colonial Coal Company, Inc. ARC Acquisition Corporation was subsequently renamed Empire Kentucky Land, Inc.

On September 25, 2019, Perry County Resources LLC (PCR) was formed as a wholly owned subsidiary of QEI.

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 and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any other period. These financial statements should be read in conjunction with the Company’s 2018 audited consolidated financial statements and notes thereto which were filed on Form 10-K on April 3, 2019.

Going Concern: The Company has suffered recurring losses from operations and currently has 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.

10

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 as a component of other income/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 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 September 30, 2019 and December 31, 2018 was $47,987 and $58,246, respectively. The total balance of restricted cash also includes amounts held under the management agreement in the amount of $0 and $82,828, respectively. See note 5 for terms of the management agreement.

The balance as of September 30, 2019 and December 31, 2018 was $297,987 and $411,692, respectively.

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 nine months ended September 30, 2019 and September 30, 2018.

	September 30, 2019		September 30, 2018
Cash	$	716,840	$	57,739
Restricted Cash		297,987		286,043
Total cash and restricted cash presented in the consolidated statement of cash flows	$	1,014,827	$	343,782

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Asset Acquisition:

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. Subsequent to the balance sheet date, WCC has paid the delinquent transfer fees and has filed for permit transfer. 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. (Note 8)

On February 12, 2019, through a share exchange, ARC merged with Empire Kentucky Land, Inc, its wholly-owned subsidiary Colonial Coal Company, Inc and purchased assets consisting of surface and mineral ownership and other related agreements of Empire Coal Holdings, LLC in exchange for a cash payment of $500,000 which was carried as a seller note until paid on February 21, 2019, a seller note of $2,000,000 payable in the form of a royalty from production off of the property and 2,000,000 common shares of ARC’s stock valued at $24,400,000. The note is currently in default as a result of non-payment at the earlier of i) completion of the securities offering and ii) August 20, 2019 (Maturity date). The default interest rate is 5%. American Resources Corporation has received a Breach of Promissory Notes from Empire Kentucky Land, Inc. The amount being sought is $2,000,000 as well as additional fees and charges. The acquired assets have an anticipated life of 25 years. Capitalized mining rights will be amortized based on productive activities over the anticipated life of 25 years. Amortization expense for this asset for the 3 months ended September 30, 2019 and 2018 amounted to $145,733 and $0, respectively. Amortization expense for this asset for the 9 months ended September 30, 2019 and 2018 amounted to $677,333 and $0, respectively. The assets will be measured for impairment when an event occurs that questions the realization of the recorded value.

The stock and assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. The assets acquired and liabilities assumed of Empire Coal were as follows at the purchase date:

Assets
Acquired Mining Rights	$	25,400,000
Land		1,500,000
Liabilities
Seller Note	$	2,500,000

On August 16, 2019, ERC acquired certain assets known as the Gold Star Acquisition in exchange for assuming certain liabilities of LC Energy, LLC and the payment of $400,000. The fair values of the asset retirement obligation liabilities assumed were determined to be $1,300,000. The liabilities assumed do not require fair value readjustments.

The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and cash, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information. The assets acquired and liabilities assumed of LC Energy Operations, LLC were as follows at the purchase date:

Assets
Cash	$	400,000
Restricted Cash		250,000
Surface Equipment		10,574
Processing and Loading Facility		639,426
Liabilities
Reclamation liability	$	1,300,000

On September 23, 2019, American Resources Corporation, (“Buyer”) entered into a binding agreement with Bear Branch Coal LLC, a Kentucky limited liability company, Perry County Coal LLC, a Kentucky limited liability company, Ray Coal LLC, a Kentucky limited liability company, and Whitaker Coal LLC, a Kentucky limited liability company (each a “Seller” and collectively, “Sellers”). The agreement was entered into as part of the bankruptcy proceedings of Cambrian Holding Company LLC, (“Cambrian), and is subject to approval by the United States Bankruptcy Court for the Eastern District of Kentucky (the “Bankruptcy Court”) in the chapter 11 bankruptcy cases of the Sellers, Case No. 19-51200(GRS), by entry of an order in form and substance acceptable to Sellers and Buyer (the “Sale Order). Under the agreement of the Sale Order, each Seller will sell, transfer, assign, convey and deliver to American Resources Corporation, effective as of the Closing, all assets, rights, titles, permits, leases, contracts and interests of such Seller free and clear of all liens, claims, interests and encumbrances, to the fullest extent permitted by the Bankruptcy Court. In consideration for the purchased assets, the Buyer will assume certain liabilities. Additionally, the Buyer will assume all liabilities relating to the transferred permits and the associated reclamation and post-mining liabilities of the purchased assets. 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.  

On September 27, 2019, PCR closed and acquired certain assets in exchange for assuming certain liabilities of Perry County Coal, LLC and a cash payment of $1. The preliminary fair values of the asset retirement obligation liabilities assumed were determined to be $4,987,748. The liabilities assumed do not require fair value readjustments.

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The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and a cash payment of $1, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information therefore the company’s conclusion is tentative while the transaction is being evaluated under ASC 805-10-20. The assets acquired and liabilities assumed of Perry County Coal, LLC were as follows at the purchase date:

Assets
Coal Inventory	$	651,698
Mine Development		518,199
Coal Refuse		177,444
Land		840,976
Underground Equipment		863,053
Surface Equipment		4,688
Processing and Loading Facility		1,444,596
Liabilities
Reclamation liability	$	2,950,761
Accrued liabilities		2,036,987

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. During the periods ending September 30, 2019 and 2018, $- and $- were incurred for loss on settlement on ARO, respectively.

The table below reflects the changes to our ARO:

Balance at December 31, 2018	$	18,538,806
Accretion – nine months September 30, 2019		962,699
Reclamation work – nine months September 30, 2019		-
Asset disposition		-
Gold Star Acquisition		1,300,000
Perry County Acquisition		2,950,761
Balance at September 30, 2019	$	23,752,266

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Customer Concentration and Disaggregation of Revenue:  For the three months ended September 30, 2019 and 2018, 93% and 71% of revenue came from two customers, respectively.  For the nine months ended September 30, 2019 and 2018, 82% and 85% of revenue came from two and three customers, respectively. 

As of September 30, 2019, and December 31, 2018, 99% and 99% of outstanding accounts receivable came from one and two customers, respectively.

For the three months ended September 30, 2019 and 2018, 93% and 44% of revenue was generated from sales to the steel and industrial industry.  For the nine months ended September 30, 2019 and 2018, 57% and 62% of generated from sales to the steel and industrial industry, respectively. For the three months ended September 30, 2019 and 2018, 7% and 56% of revenue was generated from sales to the utility generation industry.  For the nine months ended September 30, 2019 and 2018, 43% and 38% of generated from sales to the utility generation industry, respectively. 

Leases: In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASU 2016-02”). ASU 2016-02, along with related amendments issued from 2017 to 2018 (collectively, the “New Leases Standard”), requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet. The Company adopted ASU 2016-02 effective January 1, 2019 using the modified retrospective approach and elected the option to not restate comparative periods in transition and also elected the package of practical expedients for all leases within the standard, which permits the Company not to reassess its prior conclusions about lease identification, lease classification and initial direct costs.

Beneficial Conversion Features of Convertible Securities: Conversion options that are not bifurcated as a derivative pursuant to ASC 815 and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20 applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. In addition, our preferred stock issues contain conversion terms that may change upon the occurrence of a future event, such as antidilution adjustment provisions. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.

The Company has a loan, convertible into common shares at $5.25 per share, with a beneficial conversion feature added through a loan modification on February 4^th, 2019. At the time of the modification the loan had a maturity date of three months, and the conversions may occur any time from the time of the modification.

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 September 30, 2019 and December 31, 2018 amounted to $-, for both periods. Allowance for other accounts receivables as of September 30, 2019 and December 31, 2018 amounted to $- and $-, respectively.

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of September 30, 2019 and December 31, 2018.

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

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NOTE 2 - PROPERTY AND EQUIPMENT

At September 30, 2019 and December 31, 2018, property and equipment were comprised of the following:

	September 30, 2019			December 31, 2018
Processing and rail facility	$	14,496,487		$	11,630,171
Underground equipment		10,155,915			8,717,229
Surface equipment		3,224,896			3,101,518
Acquired mining rights		28,831,440			2,913,241
Coal refuse storage		12,171,271			11,993,827
Land		3,248,169			907,193
Less: Accumulated depreciation		(11,320,116	)		(6,691,259	)
Total Property and Equipment, Net	$	60,808,062		$	32,571,920

Depreciation expense amounted to $1,414,942 and $700,595 for the three month periods September 30, 2019 and September 30, 2018, respectively. Depreciation expense amounted to $3,036,747 and $1,931,374 for the nine month periods September 30, 2019 and September 30, 2018, respectively.

The estimated useful lives are as follows:

Processing and Rail Facilities	20 years
Surface Equipment	7 years
Underground Equipment	5 years
Mining Rights	5-25 years
Coal Refuse Storage	25 years

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NOTE 3 - NOTES PAYABLE  

During the nine-month period ended September 30, 2019, principal payments on long term debt totaled $2,548,111. During the nine-month period ended September 30, 2019, increases to long term debt totaled $8,039,379, primarily from cash received in the form of $3,500,000 from the ARC development loan, $2,500,000 from seller financing for the acquisition of Empire and $500,000 from an inventory line of credit.

The ARC development loan carries annual interest at 5%, is due on April 1, 2020 and is secured by all company assets.

The Empire acquisition loan totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. This note is currently in default and the company received a breach of contract notice in September 2019.

The inventory line of credit was dated May 30, 2019, is due July 30, 2019 and carries a $50,000 interest payment upon maturity. The company also issued 25,000 shares as consideration for the inventory line of credit. This note is currently in default. This note is also convertible into common shares. It was determined that no beneficial conversion feature was present as of September 30, 2019. The inventory line of credit is secured by the underlying inventory.

On July 25, 2019, the Company drew an additional $400,000 on the ARC Business Loan. The advance is to be repaid in weekly $100,000 payments commencing on August 9, 2019 with the full balance being due September 30, 2019. The amount is outstanding as is now due on 30 days demand. The advance carries a 12% interest rate. The ARC Business Loan is secured by a substantially all of the corporate assets.

On August 9, 2019, the Company entered into a $500,000 promissory note with a non-related entity. The note bears interest at 11% and is due by September 15, 2019. On August 6, 2019, $250,000 was drawn on the promissory note. On August 9, 2019, $250,000 was drawn on the promissory note. On August 16, 2019, an additional $300,000 was drawn on the promissory note. The note included 300,000 common shares resulting in a relative fair value calculation discount of $210,581 which is amortized over the term of the note. This note is currently in default. The note is secured by specific equipment

On September 27, 2019, the Company entered into a promissory note with a non-related entity for an amount up to $1,850,000 in conjunction with the PCR asset acquisition but separate from the assumed liabilities. $250,000 was drawn on this note as of September 30, 2019. The note bears interest at 4% and is due in full on September 27, 2020. The note was subsequently amended on October 18, 2019 the increase the full amount of the borrowing to $2,010,547. The note is unsecured. The initial draw was to be used for closing costs and the remaining tranches are to be used for payroll and payroll related expenses. The note carries restrictive covenants outlined in the note agreement.

On September 8, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $600,000. The note carries 0% interest and is due April 1, 2019. The agreement provided for $80,000 paid upon execution, $30,000 monthly payments until the balance is paid in full. The note is secured by the equipment purchased. This note is currently in default. In the event that any monthly payment is more than ten days past due, the lender shall have the right to declare the borrower in default of the note and may declare the remaining future payments due and owing under the note agreement immediately due and owing and may immediately proceed to collect the same and or take possession of the equipment.

On July 31, 2015, the Company entered into an equipment lease payable with an unrelated company in 48 equal payments of $3,304 with an interest rate of 5.25% with a balloon payment at maturity of July 31, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 5. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. This note is currently in default.

On September 25, 2017, the Company entered into an equipment purchase Agreement, which carries 0% interest with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $350,000. The agreement provided for $20,000 monthly payments until the balance is paid in full. The note matured on September 25, 2019, and is now in default. The note is secured by the equipment purchased with the note.

Sales Financing Arrangement ARC         

During May 2018, the company entered into a financing arrangement with two unrelated parties. The notes totaled $2,859,500, carried an original issue discount of $752,535, interest rate of 33% and have a maturity date of January 2019 and are secured by future receivables as well as personal guarantees of two officers of the company. This note is currently in default. Upon default the agreement calls for all future sales to be applied first to the outstanding loan.

Seller Note – Wyoming County         

In conjunction with the asset acquisition, the Company issued a $600,000 promissory note payable to an unrelated company. See note 1. $350,000 is due on demand and the remaining $250,000 will be paid with monthly payments based on $1 per ton of coal to originate from the assets acquired, commencing November 1, 2019. $150,000 was paid in January 2019. The note was due on May 7, 2019, is unsecured and carries interest at 0%. This note is currently in default. Upon the occurrence of any Event of Default, the holder hereof may, at its option, (a) declare the entire unpaid principal of this Note immediately due and payable without notice, demand or presentment, all of which are hereby waived, and upon such declaration, the same shall become and shall be immediately due and payable, (b) foreclose the security interests created by the Loan Documents, (c) offset against this Note any sum or sums owed by the holder hereof to Maker, and (d) take any and all other actions available to Payee under this Note, at law, in equity or otherwise.      

During the nine-month period ended September 30, 2018, principal payments on long term debt totaled $2,064,902. During the nine-month period ended September 30, 2018, increases to long term debt totaled $5,316,977.

During the nine-month period ended September 30, 2019, proceeds from the factoring agreement totaled $16,710,922 and repayments totaled $17,798,335.

During the nine-month period ended September 30, 2018, proceeds from the factoring agreement totaled $23,100,358 and repayments totaled $22,312,924.

On February 4, 2019, the ARC business loan was amended to allow for an initial three-month due date extension and will subsequently be due on 30 days demand. As part of this amendment, a conversion into company common stock was also added. The balance at conversion including accrued interest totaled $7,362,925. The conversion price is $5.25 and the common stock price at the time of the amended was $11.00. The addition of the beneficial conversion feature created a discount in the amount of $7,362,925 which is amortized into interest expense over the three-month extension period. Additional expense due to the amortization of the discount for the three-month period ended June 30, 2019 amounted to $2,863,360 and for the six-month period amounted to $7,362,925, respectively. The Company analyzed the conversion options in the convertible loan payables for derivative accounting consideration under ASC 815, Derivative and Hedging, and determines that the transactions do not qualify for derivative treatment. The Company evaluated the conversion for Beneficial Conversion Features (BCF) and concluded the amendment incurred a Beneficial Conversion Features (BCF) when it was issued on February 4, 2019.

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NOTE 4 - RELATED PARTY TRANSACTIONS

The Company leases property from a related entity named Land Resources & Royalties (LRR). 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 in the consolidated financial statements. For the three-month and nine-month period ending September 30, 2019, royalty expense incurred with LRR amounted to $112,107 and $231,685 respectively. Additionally, amounts advanced from LRR amounted to $31,507 and amounts repaid to LRR amounted to $100,000. As of September 30, 2019, total amounts owed LRR amounted to $639,180.

The Company has a coal sales commission agreement with a coal brokerage firm partially owned by a director of the company. Total amounts owed to the coal brokerage firm as of September 30, 2019 were $110,858, of which $29,677 were incurred during 2019.

The Company has in the past borrowed funds from affiliates including officers. These amounts are unsecured, due on demand and non-interest bearing. Amounts outstanding as of September 30, 2019 and December 31, 2018 totaled $132,639 and $124,000, respectively. The company repaid related party loans to an officer in the amount of $9,861.

NOTE 5 – MANAGEMENT AGREEMENT

On April 13, 2015, ERC entered into a mining and management agreement with an unrelated entity, to operate a coal mining and processing facility in Jasonville, Indiana. Under the management agreement, net funds advanced for the nine-month period ended September 30, 2019 and 2018 are $92,085 and $99,582, respectively and the amounts repaid totaled $92,085 and $127,957, respectively. During the nine-month period ended September 30, 2019 and 2018, fees paid under the agreement amounted $340,915 and $313,114, respectively which has been recorded in other income. The mining and management agreement was terminated on September 20, 2019.

NOTE 6 – EQUITY TRANSACTIONS

There were no Series A Preferred transactions for the three and nine month period ending September 30, 2018. There were 300,000 shares issued for services for the three and nine month periods ending September 30, 2018.

Employee stock compensation expense for the three-month period ending September 30, 2019 and 2018 amounted to $245,356 and $201,250 respectively.

Employee stock compensation expense for the nine-month period ending September 30, 2019 and 2018 amounted to $240,443 and $201,250 respectively.

On January 16, 2019, an affiliate of the Company converted its remaining 29,051 shares of Series A Preferred into 96,837 common shares.

On January 17, 2019, a non-affiliated shareholder partially exercised 300,000 shares of a warrant they held in the Company. The exercise was cashless, and the shareholder received 299,713 shares of common stock as a result of the conversion.

On January 25, 2019, the Company extended its consulting agreement with Redstone Communications, LLC for an additional six-month term, and as a result, we issued 105,000 restricted common shares to Redstone Communications LLC and 45,000 restricted common shares to Mr. Marlin Molinaro, another five-year warrant to purchase up to 175,000 common shares of our Company at an exercise price of $1.50 per share and issued to Mr. Marlin Molinaro another five-year warrant option to purchase up to 75,000 common shares of our Company at an exercise price of $1.50 per share as compensation for the second six months of an agreement. Should Redstone Communications, LLC and Mr. Molinaro. If the warrants which are received under the second six months of engagement are exercised, the Company will receive up to $262,500 and $112,500, respectively. The common shares were valued at $10.50 on January 25, 2019 and resulted in an expense of $1,575,000 which was recorded in full on January 25, 2019. The corresponding expense of the issued warrants was recorded in full in the amount of $2,385,000.

On January 27, 2019, the Company issued 1,000 shares of common shares to an unrelated party for the consideration of $5,000 cash to the Company.

On January 28, 2019, the Company issued a total of 400 shares of common shares to two unrelated parties for the total consideration of $2,000 cash to the Company.

 

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On January 30, 2019, the Company entered into an Investor Relations Agreement with American Capital Ventures, Inc. (“American Capital”) whereby American Capital will provide, among other services, assistance to the Company in planning, reviewing and creating corporate communications, press releases, and presentations and consulting and liaison services to the Company relating to the conception and implementation of its corporate and business development plan. The term of the agreement is six months and American Capital was immediately issued 9,000 shares of common shares as compensation under the agreement. The common shares were valued at $10.80 on January 30, 2019 and resulted in an expense of $97,200 which was recorded in full on January 30, 2019.

On January 31, 2019, the Company issued a total of 3,917 shares of common shares, priced at $6 per share, to an unrelated party for the settlement of trade payables in the total amount of $23,502. If at the time of potential sale of the shares, the listed price per share is below $6, the Company is required to purchase the shares back at $6 per share which results in a contingent liability of $23,502. The common shares were valued at $11.00 on January 31, 2019 and resulted in a loss on settlement of $19,585.

On February 1, 2019, the Company issued a total of 1,000 shares of common shares to two unrelated parties for the total consideration of $5,000 cash to the Company.

On February 6, 2019, a non-affiliated shareholder partially exercised 300,000 shares of a warrant they held in the Company. The exercise was cashless, and the shareholder received 299,714 shares of common stock as a result of the conversion.

On February 4 through February 8, 2019, the Company issued a total of 17,800 shares of common shares to sixteen unrelated parties for the total consideration of $89,000 cash to the Company.

On February 10, 2019, $3,000 worth of trade payables were settled with 500 common shares of the company. The common shares were valued at $12.15 on February 10, 2019 and resulted in a loss on settlement of $3,075.

On February 12, 2019, the Company executed a contract with an unrelated party for the acquisition of stock and assets of entities with non-operating assets consisting of surface and mineral ownership and other related agreements. Consideration is in the form of 2,000,000 common shares, priced at the closing market price of $12.20 per share of common share, as well as $500,000 cash and a promissory note totaling $2,000,000 with a maturity of less than 1 year. The note is secured by a land contract on the acquired property.

On February 14, 2019, 452,729 Series A preferred shares were converted into 1,509,097 common shares of the company in a cashless conversion under the terms of the agreement. This resulted in no more Series A Preferred stock being outstanding as of this date.

On February 20, 2019, the Company issued 1,000,000 shares of Class A Common Stock at a price of $4 per share in conjunction with its effective S-1/A Registration Statement. Net proceeds to the Company amounted to $3,695,000. As part of the underwriter agreement, 70,000 warrants to purchase Class A Common Stock were issued to the underwriter. These warrants expire on February 15, 2021 and carry an exercise price of $4.40 per share. The warrants had a value of $123,000 was recorded as an increase and decrease in additional paid in capital. Offering costs totaled $447,000, which has been recorded as a reduction of equity.

On February 21, 2019, 50,000 Series C Preferred shares were converted into 13,750 shares of Class A Common Stock in a cashless conversion under the terms of the agreement. This resulted in no more Series C Preferred stock being outstanding as of this date.

On March 7, 2019, the Company issued an additional 150,000 shares of Class A Common Stock at a price of $4 per share as the over-allotment from the effective S-1/A Registration Statement. The net proceeds to the company amounted to $558,000. As part of the underwriter agreement, 10,500 warrants to purchase Class A Common Stock were issued to the underwriter. These warrants expire on February 15, 2021 and carry an exercise price of $4.40 per share. The warrants had a value of $23,100 was recorded as an increase and decrease in additional paid in capital.

On May 7, 2019, the Company issued 50,000 shares of common stock as part of a settlement to an unrelated entity for the use of certain mining equipment. The stock price at the time of issuance was $3.65 resulting in a settlement expense of $182,500.

On May 30, 2019, the Company issued 25,000 shares to an unrelated entity in conjunction with a short-term borrowing facility issued by the entity. The stock price at the time of issuance was $3.49 resulting in a stock interest expense of $87,250.

On June 5, 2019, the Company issued options to certain employees in the amount of 175,000 under an adopted stock option plan. The issuance of employee options resulted in an expense totaling $4,910. The total expense will be $353,500 which will be amortized over the three-year vesting period.

On June 6, 2019, the Company and a former employee reached a settlement agreement where 107,000 shares of common stock were canceled and returned to the company. These shares were forfeited and returned to the company for no consideration and are accounted for as authorized and not issued.

On June 7, 2019, the Company issued 25,000 shares of common stock at $4 per share to an unrelated entity under an equity purchase agreement. The Company received $100,000 cash consideration for the investment. The stock price at the time of issuance was $2.10. If the Company, during the period in which the purchased shares are held by the original entity, issues or sells any shares of common stock for a price less than $4.00, the Company shall issue to the purchaser an additional number of shares of common stock, so as to provide the purchaser the benefit of the reduced price per share.

On June 7, 2019, the Company issued 30,000 shares of common stock for consulting services to an unrelated party. The stock price at the time of issuance was $2.10 resulting in an expense totaling $63,000. The consulting agreement is for six months and the shares for services were deemed to have been earned upon execution of the consulting agreement on May 30, 2019. In addition to the shares issued, 75,000 warrants with three-year exercise period and $4.00 strike price were issued upon execution of the consulting agreement resulting in a expense of $139,500.

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On June 12, 2019, the Company restructured a series of warrants; C-1, C-2, C-3 and C-4, held by an unrelated party as part of the ARC business loan which resulted in an increase in the number of warrants issued from 1.6 million shares across four warrants to 3.0 million shares across four warrants; an increase in the term of the warrants from the date of the amendment from a weighted average of 297 days to 753 days, and a decrease in the weighted average exercise price from $7.665 per share to $4.325 per share. Fair value was determined using the Black-Scholes Option Pricing Model. The incremental value as a result of the modification is a one-time warrant expense totaling $2,545,360 as of June 30, 2019.

On June 13, 2019, the Company issued 28,000 shares of common stock under a consulting agreement to an unrelated party. The stock price at the time of issuance was $2.53 resulting in a stock-based compensation of $70,840. The term of the consulting agreement is 6 months with monthly payments equal to $5,000 payable in months three through six of the agreement.

On July 1, 2019, the Company issued 200,000 common stock options under the Incentive Stock Option Agreement. The options vest equally over an 8 year term and have an exercise price of $3.52 per share. Utilizing a Black-Scholes Option Pricing model, the value of these options at issuance was determined to be $540,000, which is being amortized over the vesting term.

On August 16, 2019, the Company issued 300,000 shares of Class A Common Stock in conjunction with a $800,000 loan from an unrelated party. Based on a relative fair value calculation, the stock issuance created a debt discount totaling $210,581 which was fully amortized during the three month period ending September 30, 2019.

On August 27, 2019, the Company issued 3,600,000 shares of Class A Common Stock at a price of $1.04 per share. In conjunction with the common stock issuance, the Company issued warrants to purchase up to 3,600,000 shares of common stock at $.01 for each warrant in conjunction with its effective S-3/A Registration Statement. Net proceeds to the Company amounted to $3,409,600. The warrants to purchase common stock carry an exercise price of $1.20 and a 5-year term. Offering costs totaled $370,400, which has been recorded as a reduction of equity.

On September 30, 2019, the Company issued warrants to purchase up to 445,400 shares of common stock at $.01 for each warrant in conjunction with its effective S-3/A Registration Statement. Net proceeds to the Company amounted to $4,098. The warrants to purchase common stock carry an exercise price of $1.20 and a 5-year term. Offering costs totaled $356, which has been recorded as a reduction of equity.

The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the warrant and option fair value:

Warrant and Option Fair Value Inputs

	September 30, 2019
Expected Dividend Yield		0	%
Expected volatility	87.97-97.29		%
Risk-free rate	1.4–1.62		%
Expected life of warrants	.43 – 7.75 years

The following is a summary of the Company’s stock warrant activity for the nine months September 30, 2019:

Company Warrants:

WARRANTS
December 31, 2018 to September 30, 2019
			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Outstanding - December 31, 2018		5,545,227	$	2.745		1.704	$	42,063,228
Exercisable - December 31, 2018		5,545,227	$	2.745		1.704	$	42,063,228
Granted		7,450,900	$	2.516		-	$	-
Forfeited or Expired		1,697,223	$	7.638		-	$	-
Exercised		600,000	$	0.010		-	$	-
Outstanding - September 30, 2019		10,698,904	$	1.831		2.855	$	1,633,863
Exercisable - September 30, 2019		10,698,904	$	1.831		2.855	$	1,633,863

 

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The following is a summary of the Company’s stock option activity for the nine months September 30, 2019:

Company Options:

OPTIONS
December 31, 2018 to September 30, 2019
			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding - December 31, 2018		681,830	$	1.413		6.447	$	405,000
Exercisable - December 31, 2018		70,000	$	4.214		4.247	$	405,000
Granted		375,000	$	3.105		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - September 30, 2019		1,056,830	$	1.960		6.250	$	-
Exercisable - September 30, 2019		273,943	$	1.821		5.324	$	-

Total preferred dividend requirement for the nine-month period ending September 30, 2019 and 2018 amounted to $- and $104,157, respectively.

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 September 30, 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 June 30, 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 September 30, 2018. Reclassifications of prior periods have been made to conform with current year presentation

 

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The following table presents the impact of the correction in the financial statements as of September 30, 2018:

Balance Sheet	As of September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Assets
Total Current Assets	$	3,536,324		$	-		$	3,536,324
Cash - restricted		286,043			-			286,043
Processing and Rail Facility		2,802,855			(279,647	)		2,523,208
Underground Equipment		9,346,692			(1,633,897	)		7,712,795
Surface Equipment		4,532,724			(1,126,208	)		3,406,516
Acquired Mining Rights		2,036,567			641,518			2,678,085
Less Accumulated Depreciation		(6,600,108	)		917,834			(5,682,275	)
Land		-			-			-
Accounts Receivable - Other		-			-			-
Note Receivable		4,117,139			-			4,117,139
Total Assets	$	20,058,236		$	(1,480,400	)	$	18,577,836
Liabilities and Shareholders' deficit
Total Current Liabilities	$	25,143,382		$	-		$	25,143,382
Long-term portion of note payables		5,072,493			-			5,072,493
Reclamation liability		20,289,527			(4,574,949	)		15,714,578
Total Liabilities		50,505,402			(4,574,949	)		45,930,453
Class A Common stock		118			-			118
Series A Preferred stock		482			-			482
Series B Preferred stock		850			-			850
APIC		19,816,567			-			19,816,567
Accumulated Deficit		(50,265,183	)		3,094,549			(47,170,635	)
Total American Resources Corporation Shareholders’ Deficit		(30,447,166	)		3,094,549			(27,352,617	)
Non Controlling Interest		-			-			-
Total Liabilities and Shareholders’ Deficit	$	20,058,236		$	(1,480,400	)	$	18,577,836

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Income Statement	For the Nine Months Ended September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Revenue
Total Revenue	$	23,386,684		$	-		$	23,386,684
Cost of Coal Sales and Processing		(18,214,195	)		-			(18,214,195	)
Accretion Expense		(1,435,295	)		318,545			(1,116,751	)
Depreciation		(1,779,539	)		(151,835	)		(1,931,374	)
Amortization of mining rights		(181,385	)		-			(181,385	)
General and Administrative		(3,892,596	)		-			(3,892,596	)
Professional Fees		(1,106,864	)		-			(1,106,864	)
Production Taxes and Royalties		(2,217,156	)		-			(2,217,156	)
Development Costs		(3,429,512	)		-			(3,429,512	)
Net Loss from Operations	$	(8,869,858	)	$	166,710		$	(8,703,149	)
Other Income, net		879,705			-			879,705
Net Loss	$	(7,990,153	)	$	166,710		$	(7,823,444	)
Less: Preferred dividend requirement		(104,157	)		-			(104,157	)
Less: Net income attributable to Non Controlling Interest		(151,278	)		-			(151,278	)
Net loss attributable to American Resources Corporation Shareholders	$	(8,245,588	)	$	166,710		$	(8,078,879	)

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Income Statement	3 Months Ended September 30, 2018
	As Previously
	Reported			Adjustment		As Restated
Revenue
Total Revenue	$	9,038,268		$	-	$	9,038,268
Cost of Coal Sales and Processing		(7,116,009	)		-		(7,116,009	)
Accretion Expense		(539,771	)		106,182		(433,589	)
Depreciation		(735,190	)		34,595		(700,595	)
Amortization of mining rights		(181,385	)		-		(181,385	)
General and Administrative		(2,320,287	)		-		(2,320,287	)
Professional Fees		(707,735	)		-		(707,735	)
Production Taxes and Royalties		(759,269	)		-		(759,269	)
Development Costs		(945,341	)		-		(945,341	)
Net Loss from Operations	$	(4,266,719	)	$	140,777	$	(4,125,942	)
Other Income (loss)		570,287			-		570,287
Net Loss	$	(3,696,432	)	$	140,777	$	(3,555,655	)
Less: Preferred dividend requirement		(17,000	)		-		(17,000	)
Less: Net income attributable to Non Controlling Interest		-			-		-
Net loss attributable to American Resources Corporation Shareholders	$	(3,713,432	)	$	140,777	$	(3,572,655	)

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Statement of Cash Flow	For the Nine Months Ended September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Cash Flows from Operating activities:
Net loss	$	(7,990,153	)	$	166,710		$	(7,823,443	)
Adjustments to reconcile net loss to net cash
Depreciation		1,779,539			151,835			1,931,374
Amortization of mining rights		181,385						181,385
Gain on cancellation of debt		(315,000	)		-			(315,000	)
Accretion expense		1,435,295			(318,545	)		1,116,751
Amortization of debt discount and issuance costs		420,134			-			420,134
Recovery of advances receivable		(92,573	)		-			(92,573	)
Gain on disposition		(807,591	)		-			(807,591	)
Stock option expense		13,410			-			13,410
Warrant expense		234,067			-			234,067
Share compensation expense		201,250			-			201,250
Change in current assets and liabilities		864,080			-			864,080
Cash used in operating activities	$	(4,076,157	)		-			(4,076,157	)
Cash used in investing activities		(5,235	)		-			(5,235	)
Cash provided by financing activities		4,039,509			-			4,039,509
Decreased in cash and restricted cash		(41,883	)		-			(41,883	)
Cash and restricted cash, beginning of year		385,665			-			385,665
Cash and restricted cash, end of year	$	343,782		$	-		$	343,782

  

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NOTE 8 - 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.

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 $783,340, the Company has accrued $2,155,970 as a payable to the Commonwealth of Kentucky including amounts owed to the Kentucky Energy Cabinet. Claims assessed by the Mine Health Safety Administration totaling $654,928 of which the Company has accrued $580,628 as a payable.

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. Subsequent to the balance sheet date, WCC has paid the delinquent transfer fees and has filed for permit transfer. 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. 

The Empire acquisition loan in conjunction with the Empire Kentucky Land merger totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. This note is currently in default and the company received a breach of contract notice in September 2019.

On August 21, 2018, Deane and an unrelated vendor entered into a settlement agreement for past payables. Pursuant to the settlement agreement, Deane will pay the full outstanding unpaid balance in accordance with the agreed to schedule, with the full amount being due on January 3, 2019. Deane is currently in default of this agreement.

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 is still in pending settlement talks.

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 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 principal office space expired in December 31, 2018 and is continuing on a month-to-month basis. The future annual rent is $6,000 through 2021. Rent expense for nine-month period ending September 30, 2019 and 2018 amounted to $24,000 and $24,000 each period, respectively.

NOTE 9 - SUBSEQUENT EVENTS

During October, 2019, the Company amended the noted related to the PCR asset acquisition to increase the available funds to draw from $1,850,000 to $2,010,547. Additional funds totaling $1,760,547 were drawn from the note related to the PCR asset acquisition. These funds were used to fund payroll related costs. The due date of the note was amended from September 27, 2020 to April 17, 2020.

During October, 2019, the Company issued 70,238 common shares to an unrelated party in accordance with the make whole provision under an investor relations agreement.

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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 9002 Technology Lane, 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.

Quest Energy currently has five 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 Quest Processing LLC (Quest Processing) located in eastern Kentucky 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 comprised 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, specialty products and thermal coal used for electricity generation.

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 reserves are defined on our properties.

McCoy Elkhorn Coal LLC

General:

Located primarily within Pike County, Kentucky, McCoy Elkhorn is currently comprised of two active mines (Mine #15 and the Carnegie 1 Mine), one mine in “hot idle” status (the PointRock 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.

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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 Mine 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.

The PointRock Mine is a surface mine in a variety of coal seams, primarily in the Pond Creek, the Lower Alma, the Upper Alma, and Cedar Grove coal seams and located near Phelps, Kentucky. Coal has been produced from the PointRock Mine in the past under different operators. Quest Energy acquired the PointRock Mine in April 2018 and is currently performing reclamation work in advance of re-starting production, which is expected in 2020. PointRock is anticipated to be mined via contour, auger, and highwall mining techniques. The coal will be stockpiled on-site and trucked approximately 23 miles to McCoy Elkhorn’s preparation facilities. The PointRock Mine is anticipated to be operated as a modified contractor mine, whereby McCoy Elkhorn provides certain mining infrastructure and equipment for the operations and pays a contractor a fixed per-ton fee for managing the workforce, procuring other equipment and supplies, and maintaining the equipment and infrastructure in proper working order. The PointRock Mine has the estimated capacity to produce up to approximately 15,000 tons per month of coal and has not yet started coal production under McCoy Elkhorn’s ownership.

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 1 active mine (the Wayland Surface Mine) and 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.

Mines:

The Wayland Surface Mine is a surface waste-rock reprocessing mine in a variety of coal seams (primarily the Upper Elkhorn 1 coal seam) located near Wayland, Kentucky. The Wayland Surface Mine is mined via area mining through the reprocessing of previously processed coal, and the coal is trucked approximately 22 miles to the Mill Creek Preparation Plant at Deane Mining, where it is processed and sold. The Wayland Surface Mine is currently a “company run” mine, whereby the Company manages the workforce at the mine and pays all expenses of the mine. During June 2018, production at the Wayland Surface Mine commenced under Quest Energy’s ownership which occurred during May 2018.

Other potential customers of Knott County Coal include industrial customers, specialty customers and utilities for electricity generation.

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 20 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.

28

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.  In 2018, prior to our acquisition, the E4-2 mine produced approximately 732,119 tons and sold the coal at an average price of $68.56 per ton. In 2017 the E4-2 mine produced approximately 1,049,647 tons and sold the coal at an average price of $75.03 per ton. In 2018, 60.2%, 27.3%, and 12.5% of the coal sold from the E4-2 was sold as soft coking/PCI, thermal, and stoker coal, respectively. In 2017, 61.5%, 25.0%, and 13.5% of the coal sold from the E4-2 was sold as soft coking/PCI, thermal, and stoker coal, respectively.

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 $1,444,596.

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.

Deane Mining LLC

General:

Located within Letcher County and Knott County, Kentucky, Deane Mining is comprised of one active underground coal mine (the Access Energy Mine), one active surface mine (Razorblade Surface) and one active 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.

 

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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.

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.

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” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

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.

 

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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 is to be paid from 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.

Empire Kentucky Land, Inc

General:

Empire Kentucky Land, Inc., and its wholly-owned subsidiary, Colonial Coal Company, Inc., own approximately 3,000 acres of mineral and another approximately 3,000 acres of surface real estate, primarily located near Phelps, Pike County, Kentucky. There are currently no coal mining or coal processing permits owned by Empire. The coal owned at Empire (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:

There are no permitted coal mines at Empire.

Processing and Transportation:

There is no permitted coal processing or loading infrastructure at Empire.

Permits:

Empire holds no permits and is not expected to hold any permits in the future.

 

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Quest Processing LLC

Quest Energy’s wholly-owned subsidiary, Quest Processing LLC, 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 Quest MGMT 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 September 30, 2019.

ERC Mining Indiana Corporation (the Gold Star Mine)

General:

Located primarily within Greene and Sullivan Counties, Indiana, ERC Mining Indiana Corporation (“ERC”) is currently comprised of one idled underground mine (the Gold Star Mine), one idled coal preparation plant and rail loadout. ERC sold its coal in the past as thermal coal to utilities.

Mines:

The Gold Star Mine is an underground mine in the Indiana IV (aka the Survant) coal seam located near the town of Jasonville, Indiana.  Currently idled, the Gold Star Mine has been mined in the past 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 preparation plant less than a mile away.

Processing and Transportation:

The idled preparation plant is a 165 ton-per-hour coal preparation facility located near the underground mine portal. The rail loadout associated with the preparation plant is a rail loadout serviced by the Indiana Rail Road. The preparation plant has a coarse refuse and slurry impoundment.

Permits: 

ERC holds one permit that covers the Gold Star Mine, processing plant, rail loadout, and related infrastructure.

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 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 Quest MGMT LLC 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 McCoy Elkhorn’s Mine #15, McCoy Elkhorn’s Carnegie Mine, and Deane Mining’s Access Energy Mine.

Coal sales at the Company is primarily outsource to third party intermediaries who act on the Company’s behalf to source potential coal sales and contracts. The third-party intermediaries have no ability to bind the Company to any contracts, and all coal sales are approved by management of the Company.

 

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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 Ramaco Resources, Blackhawk Mining, Coronado Coal, Arch Coal, Contura Energy, Warrior Met Coal, Alliance Resource Partners, and Corsa Coal. Many of these coal producers may have greater financial resources and larger reserve 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 Australia, Colombia, Indonesia and South Africa.

Legal Proceedings

From time to time, we are subject to ordinary routine litigation incidental to our normal business operations. We are not currently a party to, and our property is not subject to, any material legal proceedings.

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, SMCRA with respect to coal mining activities and ancillary activities; the CAA with respect to air emissions; the CWA with respect to water discharges and the permitting of key operational infrastructure such as impoundments; 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.

 

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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.

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. 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 9002 Technology Lane, Fishers, Indiana 46038. We pay $1,500 per month in rent for the office space and the rental lease expired in December 2018 and is continuing on a month-to-month basis. We also rent office space from a related entity 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.

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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, McCoy Elkhorn’s Mine #15 is primarily run by company employees, McCoy Elkhorn’s Carnegie Mine is primarily run by contract labor, and the Company’s various coal preparation facilities are run by company employees.

The Company currently has approximately 147 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.

Results of Operations

Our consolidated operations had operating revenues of $1,847,279 and $18,183,681 for the three-months and nine-months ended September 30, 2019 and $9,038,268 and $23,386,684 operating revenue for the three-months and nine-months ended September 30, 2018.

For the three-months and nine-months ended September 30, 2019 we have incurred net loss attributable to American Resources Corporation shareholders in the amount of $7,344,532 and $30,870,759. For the three-months and nine-months ended September 30, 2018 we have incurred net loss attributable to American Resources Corporation shareholders in the amount of $3,470,448 and $8,078,879.

The primary driver for decrease revenue was the reorganization and further development of McCoy’s Mine #15 as well as lowering production to respond to market dynamics. The primary driver for increased net loss was lower coal production and mine re-organization.

From our inception to-date our activities have been primarily financed from the proceeds of our acquisitions, sale of common shares, cash from operations and loans.

For the three months ended September 30, 2019 and 2018, coal sales and processing expenses were $2,956,305 and $6,948,129 respectively, development costs, including loss on settlement of ARO were $1,425,024 and $1,281,101, respectively, and production taxes and royalties $948,148 and $759,269, respectively. Depreciation expense for the same periods ended September 30, 2019 and 2018 were $1,414,942 and $700,595 respectively.

For the nine months ended September 30, 2019 and 2018, coal sales and processing expenses were $15,254,961 and $18,214,195 respectively, development costs, including loss on settlement of ARO were $5,912,589 and $3,429,512, respectively, and production taxes and royalties $2,811,691 and $2,217,156, respectively. Depreciation expense for the same periods ended September 30, 2019 and 2018 were $3,036,747 and $1,931,374 respectively.

 

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Liquidity and Capital Resources

As of September 30, 2019, our available cash was $1,014,827. 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.

For the nine months ending September 30, 2019 our net cash flow used in operating activities was $11,688,816 and for the nine months ending September 30, 2018 the net cash flow used in operating activities was $4,076,157.

For the nine months ending September 30, 2019 and 2018 our net cash flows provided by (used in) investing activities were $322,750 and ($5,235), respectively.

For the nine months ending September 30, 2019 and 2018 net cash proceeds from financing activities were $9,676,094 and $4,039,509, 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.

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 Note1 to the financial statements included elsewhere in this report.

Recent Accounting Pronouncements

ASU 2016-02, Leases, effective for years beginning after December 15, 2018. The Company adopted this standard on January 1, 2019 using the modified retrospective approach. The Company has concluded that the adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations.

 

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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.

As of September 30, 2019, 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, as of September 30, 2019, 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 September 30, 2019 that have materially affected the Company’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

Not applicable.

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

During the 9-month period ending September 30, 2019, sales of unregistered equity securities totaled 45,200. Proceeds of these sales amounted to $201,000 which were primarily used for working capital and development costs.

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. Exhibits referenced in previous filings by the Company with the SEC are incorporated by reference herein.

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

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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.
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.
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

40

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: November 15, 2019	By:	/s/ Mark C. Jensen
	Name:	Mark C. Jensen
	Title:	CEO, Chairman of the Board
		(Principal Executive Officer)

41

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Certification of Principal Executive Officer

I, Mark C. Jensen, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of American Resources Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 15, 2019

AMERICAN RESOURCES CORPORATION

/s/: Mark C. Jensen                                       

Mark C. Jensen,

Chief Executive Officer

Principal Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Certification of Principal Financial Officer and

Principal Accounting Officer

I, Kirk P. Taylor, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of American Resources Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 15, 2019

AMERICAN RESOURCES CORPORATION

/s/: Kirk P. Taylor                                           

Kirk P. Taylor,

Chief Financial Officer

Principal Financial Officer

Principal Accounting Officer

EX-32.1

EXHIBIT 32.1

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of American Resources Corporation, (the “Company”) on Form 10-Q for the period ending September 30, 2019 to be filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Mark C. Jensen, Principal Executive Officer of the Company, certify, to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(i)	the accompanying Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.

AMERICAN RESOURCES CORPORATION

/s/: Mark C. Jensen                                    

Mark C. Jensen,

Chief Executive Officer

Principal Executive Officer

November 15, 2019

EX-32.2

EXHIBIT 32.2

Certification of Principal Financial Officer

and Principal Accounting Officer

Pursuant to 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of American Resources Corporation (the “Company”) on Form 10-Q for the period ending September 30, 2019 to be filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Kirk P. Taylor, Principal Financial Officer and Principal Accounting Officer of the Company, certify, to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(i)	the accompanying Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.

AMERICAN RESOURCES CORPORATION

/s/: Kirk P. Taylor                                           

Kirk P. Taylor,

Chief Financial Officer

Principal Financial Officer

Principal Accounting Officer

November 15, 2019

EX-95.1

EXHIBIT 95.1

Federal Mine Safety and Health Act Information

We work to prevent accidents and occupational illnesses. We have in place health and safety programs that include extensive employee training, safety incentives, drug and alcohol testing and safety audits. The objectives of our health and safety programs are to provide a safe work environment, provide employees with proper training and equipment and implement safety and health rules, policies and programs that foster safety excellence.

Our mining operations are subject to extensive and stringent compliance standards established pursuant to the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA monitors and rigorously enforces compliance with these standards, and our mining operations are inspected frequently. Citations and orders are issued by MSHA under Section 104 of the Mine Act for violations of the Mine Act or any mandatory health or safety standard, rule, order or regulation promulgated under the Mine Act.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) requires issuers to include in periodic reports filed with the SEC certain information relating to citations or orders for violations of standards under the Mine Act. We present information below regarding certain mining safety and health violations, orders and citations, issued by MSHA and related assessments and legal actions and mine-related fatalities with respect to our active coal mining operations. In evaluating this information, consideration should be given to factors such as: (i) the number of violations, orders and citations will vary depending on the size of the coal mine, (ii) the number of violations, orders and citations issued will vary from inspector to inspector and mine to mine, and (iii) violations, orders and citations can be contested and appealed, and in that process, are often reduced in severity and amount, and are sometimes dismissed.

The following tables include information required by the Dodd-Frank Act for the nine months ended September 30, 2019. The mine data retrieval system maintained by MSHA may show information that is different than what is provided herein. Any such difference may be attributed to the need to update that information on MSHA’s system and/or other factors.

Mine or Operating Name / MSHA Identification Number	Section 104(a) S&S Citations(1)		Section 104(b) Orders(2)		Section 104(d) Citations and Orders(3)		Section 110(b)(2) Violations(4)		Section 107(a) Orders(5)		Total Dollar Value of MSHA Assessments Proposed (in thousands)(6)
Active Operations
McCoy Elkhorn Mine #15 / 15-18775		50		0		0		0		0	$	40.96
McCoy Elkhorn Carnegie Mine / 15-19313		20		0		0		0		0	$	10.78
McCoy Elkhorn Bevins Branch Preparation Plant / 15-10445		1		0		0		0		0	$	2.40
McCoy Elkhorn Point Rock / 15-07010		0		0		0		0		0	$	0.0
Deane Mining Access Mine/ 15-19532		42		1		0		0		0	$	17.75
Deane Mining Mill Creek Preparation Plant / 15-16577		0		0		0		0		0	$	0.00
Deane Mining Razorblade / 15-19829		0		0		0		0		0	$	0.00
Perry County Davidson Preparation Plant / 15-05485		0		0		0		0		0	$	0.00
Perry County E4-2 Mine / 15-19015
		0		0		0		0		0	$	0.00
Knott County Coal Wayland/15-19402		1		0		0		0		0	$	0.12

 

1

Mine or Operating Name / MSHA Identification Number	Total Number of Mining Related Fatalities		Received Notice of Pattern of Violations Under Section 104(e) (yes/no)(7)	Legal Actions Pending as of Last Day of Period		Legal Actions Initiated During Period		Legal Actions Resolved During Period
Active Operations
McCoy Elkhorn Mine #15 / 15-18775		0	No		0		0		0
McCoy Elkhorn Carnegie Mine / 15-19313		0	No		0		0		0
McCoy Elkhorn Bevins Branch Preparation Plant / 15-10445		0	No		0		0		0
McCoy Elkhorn Point Rock / 15-07010		0	No		0		0		0
Deane Mining Access Mine / 15-19532		0	No		0		0		0
Deane Mining Mill Creek Preparation Plant / 15-16577		0	No		0		0		0
Deane Mining Razorblade / 15-19829		0	No		0		0		0
Perry County Davidson Preparation Plant / 15-05485		0	No		0		0		0
Perry County E4-2 Mine / 15-19015		0	No		0		0		0
Knott County Coal Wayland / 15-19402		0	No		0		0		0

The number of legal actions pending before the Federal Mine Safety and Health Review Commission as of September 30, 2019 that fall into each of the following categories is as follows:

Mine or Operating Name / MSHA Identification Number	Contests of Citations and Orders		Contests of Proposed Penalties		Complaints for Compensation		Complaints of Discharge / Discrimination / Interference		Applications for Temporary Relief		Appeals of Judge’s Ruling
Active Operations
McCoy Elkhorn Mine #15 / 15-18775		79		79		0		0		0		0
McCoy Elkhorn Carnegie Mine / 15-19313		26		26		0		0		0		0
McCoy Elkhorn Bevins Branch Preparation Plant / 15-10445		11		11		0		0		0		0
McCoy Elkhorn Point Rock / 15-07010		0		0		0		0		0		0
Deane Mining Access Mine / 15-19532		91		91		0		0		0		0
Deane Mining Mill Creek Preparation Plant / 15-16577		25		25		0		0		0		0
Deane Mining Razorblade / 15-19829		0		0		0		0		0		0
Perry County Davidson Preparation Plant / 15-05485		0		0		0		0		0		0
Perry County E4-2 Mine / 15-19015		0		0		0		0		0		0
Knott County Coal Wayland / 15-19402		1		1		0		0		0		0

_____________

(1)	Mine Act section 104(a) S&S citations shown above are for alleged violations of mandatory health or safety standards that could significantly and substantially contribute to a coal mine health and safety hazard. It should be noted that, for purposes of this table, S&S citations that are included in another column, such as Section 104(d) citations, are not also included as Section 104(a) S&S citations in this column.
(2)	Mine Act section 104(b) orders are for alleged failures to totally abate a citation within the time period specified in the citation.
(3)	Mine Act section 104(d) citations and orders are for an alleged unwarrantable failure (i.e., aggravated conduct constituting more than ordinary negligence) to comply with mandatory health or safety standards.
(4)	Mine Act section 110(b)(2) violations are for an alleged “flagrant” failure (i.e., reckless or repeated) to make reasonable efforts to eliminate a known violation of a mandatory safety or health standard that substantially and proximately caused, or reasonably could have been expected to cause, death or serious bodily injury.
(5)	Mine Act section 107(a) orders are for alleged conditions or practices which could reasonably be expected to cause death or serious physical harm before such condition or practice can be abated and result in orders of immediate withdrawal from the area of the mine affected by the condition.
(6)	Amounts shown include assessments proposed by MSHA during the nine months ended September 30, 2019 on all citations and orders, including those citations and orders that are not required to be included within the above chart. This number may differ from actual assessments paid to MSHA as the Company may contest any proposed penalty.
(7)	Mine Act section 104(e) written notices are for an alleged pattern of violations of mandatory health or safety standards that could significantly and substantially contribute to a coal mine safety or health hazard.

2

XML

CORRECTION OF PRIOR YEAR INFORMATION (Details 2) - USD ($)	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2018	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net Loss	$ (7,344,532)	$ (3,555,655)			$ (30,870,759)	$ (7,823,444)
Depreciation expense	(1,414,942)	(700,595)			(3,036,747)	(1,931,374)
Amortization of mining rights	(802,590)				(1,339,381)
Accretion ? nine months September 30, 2019	(320,900)	(433,589)			(962,699)	(1,116,751)
Gain on disposition						(807,591)
Warrant expense					(2,545,360)
Share compensation expense					1,806,040
Cash used in operating activities					(11,688,816)	(4,076,157)
Cash provided by investing activities					322,750	(5,235)
Cash provided by financing activities					9,676,094	4,039,509
Decreased in cash and restricted cash					(1,689,972)	(41,883)
Cash and restricted cash, beginning of period					2,293,107
Cash and restricted cash, beginning of period					$ 2,704,799	385,665
Adjustment [Member]
Net Loss		140,777				166,710
Depreciation expense						151,835
Amortization of mining rights
Gain on cancelation of debt
Accretion ? nine months September 30, 2019						(318,545)
Amortization of debt discount and issuance costs
Recovery of advances receivable
Gain on disposition
Stock option expense
Warrant expense
Share compensation expense
Change in current assets and liabilities
Cash used in operating activities
Cash provided by investing activities
Cash provided by financing activities
Decreased in cash and restricted cash
Cash and restricted cash, end of year
Cash and restricted cash, beginning of period
As Previously Reported [Member]
Net Loss		(3,696,432)				(7,990,153)
Depreciation expense		(735,190)				(1,779,539)
Amortization of mining rights						181,385
Gain on cancelation of debt						(315,000)
Accretion ? nine months September 30, 2019		(539,771)				1,435,295
Amortization of debt discount and issuance costs						420,134
Recovery of advances receivable						(92,573)
Gain on disposition						(807,591)
Stock option expense						13,410
Warrant expense						234,067
Share compensation expense						201,250
Change in current assets and liabilities						864,080
Cash used in operating activities						(4,076,157)
Cash provided by investing activities						(5,235)
Cash provided by financing activities						4,039,509
Decreased in cash and restricted cash						(41,883)
Cash and restricted cash, beginning of period				$ 385,665		385,665
Cash and restricted cash, end of year						343,782
As Restated [Member]
Net Loss		(3,555,655)				(7,823,444)
Depreciation expense		(700,595)				1,913,374
Amortization of mining rights						181,385
Gain on cancelation of debt						(315,000)
Accretion ? nine months September 30, 2019		$ (433,589)				1,116,751
Amortization of debt discount and issuance costs						420,134
Recovery of advances receivable						(92,573)
Gain on disposition						(807,591)
Stock option expense						13,410
Warrant expense						234,067
Share compensation expense						201,250
Change in current assets and liabilities						864,080
Cash used in operating activities						(4,076,157)
Cash provided by investing activities						5,235
Cash provided by financing activities						4,039,509
Decreased in cash and restricted cash						(41,883)
Cash and restricted cash, end of year						343,782
Cash and restricted cash, beginning of period						$ 385,665

XML

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Due to affiliate	$ 132,639		$ 132,639		$ 124,000
Repayment related party loans			9,861
Director owed			110,858
Royalty expense	(948,148)	$ (759,269)	(2,811,691)	$ (2,217,156)
Proceeds from related party			8,639
LRR [Member]
Royalty expense	112,107		231,685
Proceeds from related party			31,507
Repayment of related party			100,000
Due to related party	$ 639,180		$ 639,180

XML

EQUITY TRANSACTIONS (Detail 2)	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Average Contractual Life [Member]
Outstanding Balance Weighted Average	6 years 5 months 20 days
Exerisable beginning weighted average	4 years 3 months
Ending Balance Weighted Average	2 years 102 months 18 days
Exercisable Ending Weighted Average	5 years 3 months 27 days
Aggregate Intrinsic [Member]
Outstanding Balance Intrinsic | $	$ 405,000
Beginning Exercisable Intrinsic | $	405,000
Ending Balance Intrinsic | $	1,633,863
Ending Exercisable Intrinsic | $	$ 1,633,863
Weighted Average [Member]
Beginning Outstanding Exercise	$ 1.413
Exercisable beginning Exercise	4.214
Granted	3.105
Forfeited or Expired
Exercised
Ending Outstanding Exercise	1.960
Ending Exercisable Exercise	$ 1.821
Option [Member]
Exercisable Ending option | shares	273,943
Ending Balance option | shares	1,056,830
Forfeited or Expired | shares	1,697,223
Granted | shares	375,000
Exercised | shares	600,000
Beginning Exercisable option | shares	681,830

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Quest Energy Inc, (QEI), Deane Mining, LLC (Deane), Quest Processing LLC (Quest Processing), ERC Mining Indiana Corp (ERC), McCoy Elkhorn Coal LLC (McCoy), Wyoming County Coal LLC (WCC), Knott County Coal LLC (KCC), Empire Kentucky Land, Inc, Colonial Coal Company, Inc. (Empire) and Perry County Resources LLC (PCR). All significant intercompany accounts and transactions have been eliminated.

On February 12, 2019, ARC Acquisition Corporation (ARCAC) was formed as a wholly owned subsidiary of ARC. On February 12, 2019, ARCAC merged with Empire Kentucky Land, Inc which is the 100% owner of Colonial Coal Company, Inc. ARC Acquisition Corporation was subsequently renamed Empire Kentucky Land, Inc.

On September 25, 2019, Perry County Resources LLC (PCR) was formed as a wholly owned subsidiary of QEI.

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 and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any other period. These financial statements should be read in conjunction with the Company’s 2018 audited consolidated financial statements and notes thereto which were filed on Form 10-K on April 3, 2019.

Going Concern

The Company has suffered recurring losses from operations and currently has 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.

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 as a component of other income/expense in the accompanying Consolidated Statements of Operations.

Cash

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 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 September 30, 2019 and December 31, 2018 was $47,987 and $58,246, respectively. The total balance of restricted cash also includes amounts held under the management agreement in the amount of $0 and $82,828, respectively. See note 5 for terms of the management agreement.

The balance as of September 30, 2019 and December 31, 2018 was $297,987 and $411,692, respectively.

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 nine months ended September 30, 2019 and September 30, 2018.

	September 30, 2019		September 30, 2018
Cash	$	716,840	$	57,739
Restricted Cash		297,987		286,043
Total cash and restricted cash presented in the consolidated statement of cash flows	$	1,014,827	$	343,782

Asset Acquisition

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. Subsequent to the balance sheet date, WCC has paid the delinquent transfer fees and has filed for permit transfer. 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. (Note 8)

On February 12, 2019, through a share exchange, ARC merged with Empire Kentucky Land, Inc, its wholly-owned subsidiary Colonial Coal Company, Inc and purchased assets consisting of surface and mineral ownership and other related agreements of Empire Coal Holdings, LLC in exchange for a cash payment of $500,000 which was carried as a seller note until paid on February 21, 2019, a seller note of $2,000,000 payable in the form of a royalty from production off of the property and 2,000,000 common shares of ARC’s stock valued at $24,400,000. The note is currently in default as a result of non-payment at the earlier of i) completion of the securities offering and ii) August 20, 2019 (Maturity date). The default interest rate is 5%. American Resources Corporation has received a Breach of Promissory Notes from Empire Kentucky Land, Inc. The amount being sought is $2,000,000 as well as additional fees and charges. The acquired assets have an anticipated life of 25 years. Capitalized mining rights will be amortized based on productive activities over the anticipated life of 25 years. Amortization expense for this asset for the 3 months ended September 30, 2019 and 2018 amounted to $145,733 and $0, respectively. Amortization expense for this asset for the 9 months ended September 30, 2019 and 2018 amounted to $677,333 and $0, respectively. The assets will be measured for impairment when an event occurs that questions the realization of the recorded value.

The stock and assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. The assets acquired and liabilities assumed of Empire Coal were as follows at the purchase date:

Assets
Acquired Mining Rights	$	25,400,000
Land		1,500,000
Liabilities
Seller Note	$	2,500,000

On August 16, 2019, ERC acquired certain assets known as the Gold Star Acquisition in exchange for assuming certain liabilities of LC Energy, LLC and the payment of $400,000. The fair values of the asset retirement obligation liabilities assumed were determined to be $1,300,000. The liabilities assumed do not require fair value readjustments.

The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and cash, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information. The assets acquired and liabilities assumed of LC Energy Operations, LLC were as follows at the purchase date:

Assets
Cash	$	400,000
Restricted Cash		250,000
Surface Equipment		10,574
Processing and Loading Facility		639,426
Liabilities
Reclamation liability	$	1,300,000

On September 23, 2019, American Resources Corporation, (“Buyer”) entered into a binding agreement with Bear Branch Coal LLC, a Kentucky limited liability company, Perry County Coal LLC, a Kentucky limited liability company, Ray Coal LLC, a Kentucky limited liability company, and Whitaker Coal LLC, a Kentucky limited liability company (each a “Seller” and collectively, “Sellers”). The agreement was entered into as part of the bankruptcy proceedings of Cambrian Holding Company LLC, (“Cambrian), and is subject to approval by the United States Bankruptcy Court for the Eastern District of Kentucky (the “Bankruptcy Court”) in the chapter 11 bankruptcy cases of the Sellers, Case No. 19-51200(GRS), by entry of an order in form and substance acceptable to Sellers and Buyer (the “Sale Order). Under the agreement of the Sale Order, each Seller will sell, transfer, assign, convey and deliver to American Resources Corporation, effective as of the Closing, all assets, rights, titles, permits, leases, contracts and interests of such Seller free and clear of all liens, claims, interests and encumbrances, to the fullest extent permitted by the Bankruptcy Court. In consideration for the purchased assets, the Buyer will assume certain liabilities. Additionally, the Buyer will assume all liabilities relating to the transferred permits and the associated reclamation and post-mining liabilities of the purchased assets. 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.  

On September 27, 2019, PCR closed and acquired certain assets in exchange for assuming certain liabilities of Perry County Coal, LLC and a cash payment of $1. The preliminary fair values of the asset retirement obligation liabilities assumed were determined to be $4,987,748. The liabilities assumed do not require fair value readjustments.

The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and a cash payment of $1, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information therefore the company’s conclusion is tentative while the transaction is being evaluated under ASC 805-10-20. The assets acquired and liabilities assumed of Perry County Coal, LLC were as follows at the purchase date:

Assets
Coal Inventory	$	651,698
Mine Development		518,199
Coal Refuse		177,444
Land		840,976
Underground Equipment		863,053
Surface Equipment		4,688
Processing and Loading Facility		1,444,596
Liabilities
Reclamation liability	$	2,950,761
Accrued liabilities		2,036,987

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. During the periods ending September 30, 2019 and 2018, $- and $- were incurred for loss on settlement on ARO, respectively.

The table below reflects the changes to our ARO:

Balance at December 31, 2018	$	18,538,806
Accretion – nine months September 30, 2019		962,699
Reclamation work – nine months September 30, 2019		-
Asset disposition		-
Gold Star Acquisition		1,300,000
Perry County Acquisition		2,950,761
Balance at September 30, 2019	$	23,752,266

Customer Concentration and Disaggregation of Revenue

For the three months ended September 30, 2019 and 2018, 93% and 71% of revenue came from two customers, respectively.  For the nine months ended September 30, 2019 and 2018, 82% and 85% of revenue came from two and three customers, respectively. 

As of September 30, 2019, and December 31, 2018, 99% and 99% of outstanding accounts receivable came from one and two customers, respectively.

For the three months ended September 30, 2019 and 2018, 93% and 44% of revenue was generated from sales to the steel and industrial industry.  For the nine months ended September 30, 2019 and 2018, 57% and 62% of generated from sales to the steel and industrial industry, respectively. For the three months ended September 30, 2019 and 2018, 7% and 56% of revenue was generated from sales to the utility generation industry.  For the nine months ended September 30, 2019 and 2018, 43% and 38% of generated from sales to the utility generation industry, respectively.

Leases

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASU 2016-02”). ASU 2016-02, along with related amendments issued from 2017 to 2018 (collectively, the “New Leases Standard”), requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet. The Company adopted ASU 2016-02 effective January 1, 2019 using the modified retrospective approach and elected the option to not restate comparative periods in transition and also elected the package of practical expedients for all leases within the standard, which permits the Company not to reassess its prior conclusions about lease identification, lease classification and initial direct costs.

Beneficial Conversion Features of Convertible Securities

Conversion options that are not bifurcated as a derivative pursuant to ASC 815 and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20 applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. In addition, our preferred stock issues contain conversion terms that may change upon the occurrence of a future event, such as antidilution adjustment provisions. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.

The Company has a loan, convertible into common shares at $5.25 per share, with a beneficial conversion feature added through a loan modification on February 4^th, 2019. At the time of the modification the loan had a maturity date of three months, and the conversions may occur any time from the time of the modification.

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 September 30, 2019 and December 31, 2018 amounted to $-, for both periods. Allowance for other accounts receivables as of September 30, 2019 and December 31, 2018 amounted to $- and $-, respectively.

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of September 30, 2019 and December 31, 2018.

Reclassifications

Reclassifications of prior periods have been made to conform with current year presentation.

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EQUITY TRANSACTIONS

9 Months Ended

Sep. 30, 2019

EQUITY TRANSACTIONS

NOTE 6 - EQUITY TRANSACTIONS

There were no Series A Preferred transactions for the three and nine month period ending September 30, 2018. There were 300,000 shares issued for services for the three and nine month periods ending September 30, 2018.

Employee stock compensation expense for the three-month period ending September 30, 2019 and 2018 amounted to $245,356 and $201,250 respectively.

Employee stock compensation expense for the nine-month period ending September 30, 2019 and 2018 amounted to $240,443 and $201,250 respectively.

On January 16, 2019, an affiliate of the Company converted its remaining 29,051 shares of Series A Preferred into 96,837 common shares.

On January 17, 2019, a non-affiliated shareholder partially exercised 300,000 shares of a warrant they held in the Company. The exercise was cashless, and the shareholder received 299,713 shares of common stock as a result of the conversion.

On January 25, 2019, the Company extended its consulting agreement with Redstone Communications, LLC for an additional six-month term, and as a result, we issued 105,000 restricted common shares to Redstone Communications LLC and 45,000 restricted common shares to Mr. Marlin Molinaro, another five-year warrant to purchase up to 175,000 common shares of our Company at an exercise price of $1.50 per share and issued to Mr. Marlin Molinaro another five-year warrant option to purchase up to 75,000 common shares of our Company at an exercise price of $1.50 per share as compensation for the second six months of an agreement. Should Redstone Communications, LLC and Mr. Molinaro. If the warrants which are received under the second six months of engagement are exercised, the Company will receive up to $262,500 and $112,500, respectively. The common shares were valued at $10.50 on January 25, 2019 and resulted in an expense of $1,575,000 which was recorded in full on January 25, 2019. The corresponding expense of the issued warrants was recorded in full in the amount of $2,385,000.

On January 27, 2019, the Company issued 1,000 shares of common shares to an unrelated party for the consideration of $5,000 cash to the Company.

On January 28, 2019, the Company issued a total of 400 shares of common shares to two unrelated parties for the total consideration of $2,000 cash to the Company.

On January 30, 2019, the Company entered into an Investor Relations Agreement with American Capital Ventures, Inc. (“American Capital”) whereby American Capital will provide, among other services, assistance to the Company in planning, reviewing and creating corporate communications, press releases, and presentations and consulting and liaison services to the Company relating to the conception and implementation of its corporate and business development plan. The term of the agreement is six months and American Capital was immediately issued 9,000 shares of common shares as compensation under the agreement. The common shares were valued at $10.80 on January 30, 2019 and resulted in an expense of $97,200 which was recorded in full on January 30, 2019.

On January 31, 2019, the Company issued a total of 3,917 shares of common shares, priced at $6 per share, to an unrelated party for the settlement of trade payables in the total amount of $23,502. If at the time of potential sale of the shares, the listed price per share is below $6, the Company is required to purchase the shares back at $6 per share which results in a contingent liability of $23,502. The common shares were valued at $11.00 on January 31, 2019 and resulted in a loss on settlement of $19,585.

On February 1, 2019, the Company issued a total of 1,000 shares of common shares to two unrelated parties for the total consideration of $5,000 cash to the Company.

On February 6, 2019, a non-affiliated shareholder partially exercised 300,000 shares of a warrant they held in the Company. The exercise was cashless, and the shareholder received 299,714 shares of common stock as a result of the conversion.

On February 4 through February 8, 2019, the Company issued a total of 17,800 shares of common shares to sixteen unrelated parties for the total consideration of $89,000 cash to the Company.

On February 10, 2019, $3,000 worth of trade payables were settled with 500 common shares of the company. The common shares were valued at $12.15 on February 10, 2019 and resulted in a loss on settlement of $3,075.

On February 12, 2019, the Company executed a contract with an unrelated party for the acquisition of stock and assets of entities with non-operating assets consisting of surface and mineral ownership and other related agreements. Consideration is in the form of 2,000,000 common shares, priced at the closing market price of $12.20 per share of common share, as well as $500,000 cash and a promissory note totaling $2,000,000 with a maturity of less than 1 year. The note is secured by a land contract on the acquired property.

On February 14, 2019, 452,729 Series A preferred shares were converted into 1,509,097 common shares of the company in a cashless conversion under the terms of the agreement. This resulted in no more Series A Preferred stock being outstanding as of this date.

On February 20, 2019, the Company issued 1,000,000 shares of Class A Common Stock at a price of $4 per share in conjunction with its effective S-1/A Registration Statement. Net proceeds to the Company amounted to $3,695,000. As part of the underwriter agreement, 70,000 warrants to purchase Class A Common Stock were issued to the underwriter. These warrants expire on February 15, 2021 and carry an exercise price of $4.40 per share. The warrants had a value of $123,000 was recorded as an increase and decrease in additional paid in capital. Offering costs totaled $447,000, which has been recorded as a reduction of equity.

On February 21, 2019, 50,000 Series C Preferred shares were converted into 13,750 shares of Class A Common Stock in a cashless conversion under the terms of the agreement. This resulted in no more Series C Preferred stock being outstanding as of this date.

On March 7, 2019, the Company issued an additional 150,000 shares of Class A Common Stock at a price of $4 per share as the over-allotment from the effective S-1/A Registration Statement. The net proceeds to the company amounted to $558,000. As part of the underwriter agreement, 10,500 warrants to purchase Class A Common Stock were issued to the underwriter. These warrants expire on February 15, 2021 and carry an exercise price of $4.40 per share. The warrants had a value of $23,100 was recorded as an increase and decrease in additional paid in capital.

On May 7, 2019, the Company issued 50,000 shares of common stock as part of a settlement to an unrelated entity for the use of certain mining equipment. The stock price at the time of issuance was $3.65 resulting in a settlement expense of $182,500.

On May 30, 2019, the Company issued 25,000 shares to an unrelated entity in conjunction with a short-term borrowing facility issued by the entity. The stock price at the time of issuance was $3.49 resulting in a stock interest expense of $87,250.

On June 5, 2019, the Company issued options to certain employees in the amount of 175,000 under an adopted stock option plan. The issuance of employee options resulted in an expense totaling $4,910. The total expense will be $353,500 which will be amortized over the three-year vesting period.

On June 6, 2019, the Company and a former employee reached a settlement agreement where 107,000 shares of common stock were canceled and returned to the company. These shares were forfeited and returned to the company for no consideration and are accounted for as authorized and not issued.

On June 7, 2019, the Company issued 25,000 shares of common stock at $4 per share to an unrelated entity under an equity purchase agreement. The Company received $100,000 cash consideration for the investment. The stock price at the time of issuance was $2.10. If the Company, during the period in which the purchased shares are held by the original entity, issues or sells any shares of common stock for a price less than $4.00, the Company shall issue to the purchaser an additional number of shares of common stock, so as to provide the purchaser the benefit of the reduced price per share.

On June 7, 2019, the Company issued 30,000 shares of common stock for consulting services to an unrelated party. The stock price at the time of issuance was $2.10 resulting in an expense totaling $63,000. The consulting agreement is for six months and the shares for services were deemed to have been earned upon execution of the consulting agreement on May 30, 2019. In addition to the shares issued, 75,000 warrants with three-year exercise period and $4.00 strike price were issued upon execution of the consulting agreement resulting in a expense of $139,500.

On June 12, 2019, the Company restructured a series of warrants; C-1, C-2, C-3 and C-4, held by an unrelated party as part of the ARC business loan which resulted in an increase in the number of warrants issued from 1.6 million shares across four warrants to 3.0 million shares across four warrants; an increase in the term of the warrants from the date of the amendment from a weighted average of 297 days to 753 days, and a decrease in the weighted average exercise price from $7.665 per share to $4.325 per share. Fair value was determined using the Black-Scholes Option Pricing Model. The incremental value as a result of the modification is a one-time warrant expense totaling $2,545,360 as of June 30, 2019.

On June 13, 2019, the Company issued 28,000 shares of common stock under a consulting agreement to an unrelated party. The stock price at the time of issuance was $2.53 resulting in a stock-based compensation of $70,840. The term of the consulting agreement is 6 months with monthly payments equal to $5,000 payable in months three through six of the agreement.

On July 1, 2019, the Company issued 200,000 common stock options under the Incentive Stock Option Agreement. The options vest equally over an 8 year term and have an exercise price of $3.52 per share. Utilizing a Black-Scholes Option Pricing model, the value of these options at issuance was determined to be $540,000, which is being amortized over the vesting term.

On August 16, 2019, the Company issued 300,000 shares of Class A Common Stock in conjunction with a $800,000 loan from an unrelated party. Based on a relative fair value calculation, the stock issuance created a debt discount totaling $210,581 which was fully amortized during the three month period ending September 30, 2019.

On August 27, 2019, the Company issued 3,600,000 shares of Class A Common Stock at a price of $1.04 per share. In conjunction with the common stock issuance, the Company issued warrants to purchase up to 3,600,000 shares of common stock at $.01 for each warrant in conjunction with its effective S-3/A Registration Statement. Net proceeds to the Company amounted to $3,409,600. The warrants to purchase common stock carry an exercise price of $1.20 and a 5-year term. Offering costs totaled $370,400, which has been recorded as a reduction of equity.

On September 30, 2019, the Company issued warrants to purchase up to 445,400 shares of common stock at $.01 for each warrant in conjunction with its effective S-3/A Registration Statement. Net proceeds to the Company amounted to $4,098. The warrants to purchase common stock carry an exercise price of $1.20 and a 5-year term. Offering costs totaled $356, which has been recorded as a reduction of equity.

The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the warrant and option fair value:

Warrant and Option Fair Value Inputs

	September 30, 2019
Expected Dividend Yield		0	%
Expected volatility	87.97-97.29		%
Risk-free rate	1.4–1.62		%
Expected life of warrants	.43 – 7.75 years

The following is a summary of the Company’s stock warrant activity for the nine months September 30, 2019:

Company Warrants:

WARRANTS
December 31, 2018 to September 30, 2019
			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Outstanding - December 31, 2018		5,545,227	$	2.745		1.704	$	42,063,228
Exercisable - December 31, 2018		5,545,227	$	2.745		1.704	$	42,063,228
Granted		7,450,900	$	2.516		-	$	-
Forfeited or Expired		1,697,223	$	7.638		-	$	-
Exercised		600,000	$	0.010		-	$	-
Outstanding - September 30, 2019		10,698,904	$	1.831		2.855	$	1,633,863
Exercisable - September 30, 2019		10,698,904	$	1.831		2.855	$	1,633,863

The following is a summary of the Company’s stock option activity for the nine months September 30, 2019:

Company Options:

OPTIONS
December 31, 2018 to September 30, 2019
			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding - December 31, 2018		681,830	$	1.413		6.447	$	405,000
Exercisable - December 31, 2018		70,000	$	4.214		4.247	$	405,000
Granted		375,000	$	3.105		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - September 30, 2019		1,056,830	$	1.960		6.250	$	-
Exercisable - September 30, 2019		273,943	$	1.821		5.324	$	-

Total preferred dividend requirement for the nine-month period ending September 30, 2019 and 2018 amounted to $- and $104,157, respectively.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

American Resources Corporation (ARC or the Company) operates through subsidiaries that were acquired in 2016 and 2015 for the purpose of acquiring, rehabilitating and operating various natural resource assets including coal, oil and natural gas.

Basis of Presentation and Consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Quest Energy Inc, (QEI), Deane Mining, LLC (Deane), Quest Processing LLC (Quest Processing), ERC Mining Indiana Corp (ERC), McCoy Elkhorn Coal LLC (McCoy), Wyoming County Coal LLC (WCC), Knott County Coal LLC (KCC), Empire Kentucky Land, Inc, Colonial Coal Company, Inc. (Empire) and Perry County Resources LLC (PCR). All significant intercompany accounts and transactions have been eliminated.

On February 12, 2019, ARC Acquisition Corporation (ARCAC) was formed as a wholly owned subsidiary of ARC. On February 12, 2019, ARCAC merged with Empire Kentucky Land, Inc which is the 100% owner of Colonial Coal Company, Inc. ARC Acquisition Corporation was subsequently renamed Empire Kentucky Land, Inc.

On September 25, 2019, Perry County Resources LLC (PCR) was formed as a wholly owned subsidiary of QEI.

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 and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any other period. These financial statements should be read in conjunction with the Company’s 2018 audited consolidated financial statements and notes thereto which were filed on Form 10-K on April 3, 2019.

Going Concern: The Company has suffered recurring losses from operations and currently has 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.

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 as a component of other income/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 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 September 30, 2019 and December 31, 2018 was $47,987 and $58,246, respectively. The total balance of restricted cash also includes amounts held under the management agreement in the amount of $0 and $82,828, respectively. See note 5 for terms of the management agreement.

The balance as of September 30, 2019 and December 31, 2018 was $297,987 and $411,692, respectively.

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 nine months ended September 30, 2019 and September 30, 2018.

	September 30, 2019		September 30, 2018
Cash	$	716,840	$	57,739
Restricted Cash		297,987		286,043
Total cash and restricted cash presented in the consolidated statement of cash flows	$	1,014,827	$	343,782

Asset Acquisition:

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. Subsequent to the balance sheet date, WCC has paid the delinquent transfer fees and has filed for permit transfer. 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. (Note 8)

On February 12, 2019, through a share exchange, ARC merged with Empire Kentucky Land, Inc, its wholly-owned subsidiary Colonial Coal Company, Inc and purchased assets consisting of surface and mineral ownership and other related agreements of Empire Coal Holdings, LLC in exchange for a cash payment of $500,000 which was carried as a seller note until paid on February 21, 2019, a seller note of $2,000,000 payable in the form of a royalty from production off of the property and 2,000,000 common shares of ARC’s stock valued at $24,400,000. The note is currently in default as a result of non-payment at the earlier of i) completion of the securities offering and ii) August 20, 2019 (Maturity date). The default interest rate is 5%. American Resources Corporation has received a Breach of Promissory Notes from Empire Kentucky Land, Inc. The amount being sought is $2,000,000 as well as additional fees and charges. The acquired assets have an anticipated life of 25 years. Capitalized mining rights will be amortized based on productive activities over the anticipated life of 25 years. Amortization expense for this asset for the 3 months ended September 30, 2019 and 2018 amounted to $145,733 and $0, respectively. Amortization expense for this asset for the 9 months ended September 30, 2019 and 2018 amounted to $677,333 and $0, respectively. The assets will be measured for impairment when an event occurs that questions the realization of the recorded value.

The stock and assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. The assets acquired and liabilities assumed of Empire Coal were as follows at the purchase date:

Assets
Acquired Mining Rights	$	25,400,000
Land		1,500,000
Liabilities
Seller Note	$	2,500,000

On August 16, 2019, ERC acquired certain assets known as the Gold Star Acquisition in exchange for assuming certain liabilities of LC Energy, LLC and the payment of $400,000. The fair values of the asset retirement obligation liabilities assumed were determined to be $1,300,000. The liabilities assumed do not require fair value readjustments.

The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and cash, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information. The assets acquired and liabilities assumed of LC Energy Operations, LLC were as follows at the purchase date:

Assets
Cash	$	400,000
Restricted Cash		250,000
Surface Equipment		10,574
Processing and Loading Facility		639,426
Liabilities
Reclamation liability	$	1,300,000

On September 23, 2019, American Resources Corporation, (“Buyer”) entered into a binding agreement with Bear Branch Coal LLC, a Kentucky limited liability company, Perry County Coal LLC, a Kentucky limited liability company, Ray Coal LLC, a Kentucky limited liability company, and Whitaker Coal LLC, a Kentucky limited liability company (each a “Seller” and collectively, “Sellers”). The agreement was entered into as part of the bankruptcy proceedings of Cambrian Holding Company LLC, (“Cambrian), and is subject to approval by the United States Bankruptcy Court for the Eastern District of Kentucky (the “Bankruptcy Court”) in the chapter 11 bankruptcy cases of the Sellers, Case No. 19-51200(GRS), by entry of an order in form and substance acceptable to Sellers and Buyer (the “Sale Order). Under the agreement of the Sale Order, each Seller will sell, transfer, assign, convey and deliver to American Resources Corporation, effective as of the Closing, all assets, rights, titles, permits, leases, contracts and interests of such Seller free and clear of all liens, claims, interests and encumbrances, to the fullest extent permitted by the Bankruptcy Court. In consideration for the purchased assets, the Buyer will assume certain liabilities. Additionally, the Buyer will assume all liabilities relating to the transferred permits and the associated reclamation and post-mining liabilities of the purchased assets. 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.  

On September 27, 2019, PCR closed and acquired certain assets in exchange for assuming certain liabilities of Perry County Coal, LLC and a cash payment of $1. The preliminary fair values of the asset retirement obligation liabilities assumed were determined to be $4,987,748. The liabilities assumed do not require fair value readjustments.

The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and a cash payment of $1, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of September 30, 2019 while the company continues to gather information therefore the company’s conclusion is tentative while the transaction is being evaluated under ASC 805-10-20. The assets acquired and liabilities assumed of Perry County Coal, LLC were as follows at the purchase date:

Assets
Coal Inventory	$	651,698
Mine Development		518,199
Coal Refuse		177,444
Land		840,976
Underground Equipment		863,053
Surface Equipment		4,688
Processing and Loading Facility		1,444,596
Liabilities
Reclamation liability	$	2,950,761
Accrued liabilities		2,036,987

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. During the periods ending September 30, 2019 and 2018, $- and $- were incurred for loss on settlement on ARO, respectively.

The table below reflects the changes to our ARO:

Balance at December 31, 2018	$	18,538,806
Accretion – nine months September 30, 2019		962,699
Reclamation work – nine months September 30, 2019		-
Asset disposition		-
Gold Star Acquisition		1,300,000
Perry County Acquisition		2,950,761
Balance at September 30, 2019	$	23,752,266

Customer Concentration and Disaggregation of Revenue:  For the three months ended September 30, 2019 and 2018, 93% and 71% of revenue came from two customers, respectively.  For the nine months ended September 30, 2019 and 2018, 82% and 85% of revenue came from two and three customers, respectively. 

As of September 30, 2019, and December 31, 2018, 99% and 99% of outstanding accounts receivable came from one and two customers, respectively.

For the three months ended September 30, 2019 and 2018, 93% and 44% of revenue was generated from sales to the steel and industrial industry.  For the nine months ended September 30, 2019 and 2018, 57% and 62% of generated from sales to the steel and industrial industry, respectively. For the three months ended September 30, 2019 and 2018, 7% and 56% of revenue was generated from sales to the utility generation industry.  For the nine months ended September 30, 2019 and 2018, 43% and 38% of generated from sales to the utility generation industry, respectively. 

Leases: In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (“ASU 2016-02”). ASU 2016-02, along with related amendments issued from 2017 to 2018 (collectively, the “New Leases Standard”), requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet. The Company adopted ASU 2016-02 effective January 1, 2019 using the modified retrospective approach and elected the option to not restate comparative periods in transition and also elected the package of practical expedients for all leases within the standard, which permits the Company not to reassess its prior conclusions about lease identification, lease classification and initial direct costs.

Beneficial Conversion Features of Convertible Securities: Conversion options that are not bifurcated as a derivative pursuant to ASC 815 and not accounted for as a separate equity component under the cash conversion guidance are evaluated to determine whether they are beneficial to the investor at inception (a beneficial conversion feature) or may become beneficial in the future due to potential adjustments. The beneficial conversion feature guidance in ASC 470-20 applies to convertible stock as well as convertible debt which are outside the scope of ASC 815. A beneficial conversion feature is defined as a nondetachable conversion feature that is in the money at the commitment date. In addition, our preferred stock issues contain conversion terms that may change upon the occurrence of a future event, such as antidilution adjustment provisions. The beneficial conversion feature guidance requires recognition of the conversion option’s in-the-money portion, the intrinsic value of the option, in equity, with an offsetting reduction to the carrying amount of the instrument. The resulting discount is amortized as a dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception. When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.

The Company has a loan, convertible into common shares at $5.25 per share, with a beneficial conversion feature added through a loan modification on February 4^th, 2019. At the time of the modification the loan had a maturity date of three months, and the conversions may occur any time from the time of the modification.

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 September 30, 2019 and December 31, 2018 amounted to $-, for both periods. Allowance for other accounts receivables as of September 30, 2019 and December 31, 2018 amounted to $- and $-, respectively.

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of September 30, 2019 and December 31, 2018.

Reclassifications:

Reclassifications of prior periods have been made to conform with current year presentation.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
CURRENT LIABILITIES
Current portion of long term-debt net of unamortized discount	$ 0	$ 134,296
OTHER LIABILITIES
Long-term portion of note payable net of issuance costs	$ 420,062	$ 428,699
STOCKHOLDERS' DEFICIT
Common Stock, Shares Authorized	230,000,000	230,000,000
Common Stock, Shares Issued	27,267,197	17,763,469
Common Stock, Shares Outstanding	27,267,197	17,763,469
Series A Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0	481,780
Preferred Stock, Shares Outstanding	0	481,780
Series C Preferred Stock [Member]
STOCKHOLDERS' DEFICIT
Preferred Stock, Shares Authorized	20,000,000	20,000,000
Preferred Stock, Shares Issued	0	50,000
Preferred Stock, Shares Outstanding	0	50,000

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)	1 Months Ended
	Oct. 31, 2019	Oct. 31, 2018
Common stock issued	70,238
Subsequent Event [Member]
Available fund description		During October, 2019, the Company amended the noted related to the PCR asset acquisition to increase the available funds to draw from $1,850,000 to $2,010,547.
Total additional fund		$ 1,760,547

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Assets
Coal inventory	$ 1,004,326	$ 163,800
Land	3,248,169	907,193
Underground equipment	10,155,915	8,717,229
Surface equipment	3,224,896	3,101,518
Liabilities
Accrued liabilities	1,977,142	$ 1,118,736
Perry Country Coal [Member]
Assets
Coal inventory
Mine development	177,444
Coal refuse	840,976
Land	863,053
Underground equipment	863,053
Surface equipment	4,688
Processing and Loading Facility	1,444,596
Liabilities
Reclamation liability	2,950,761
Accrued liabilities	$ 2,036,987

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CORRECTION OF PRIOR YEAR INFORMATION (Tables)

9 Months Ended

Sep. 30, 2019

CORRECTION OF PRIOR YEAR INFORMATION (Tables)

Schedule of correction in the financial statements

Balance Sheet	As of September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Assets
Total Current Assets	$	3,536,324		$	-		$	3,536,324
Cash - restricted		286,043			-			286,043
Processing and Rail Facility		2,802,855			(279,647	)		2,523,208
Underground Equipment		9,346,692			(1,633,897	)		7,712,795
Surface Equipment		4,532,724			(1,126,208	)		3,406,516
Acquired Mining Rights		2,036,567			641,518			2,678,085
Less Accumulated Depreciation		(6,600,108	)		917,834			(5,682,275	)
Land		-			-			-
Accounts Receivable - Other		-			-			-
Note Receivable		4,117,139			-			4,117,139
Total Assets	$	20,058,236		$	(1,480,400	)	$	18,577,836
Liabilities and Shareholders' deficit
Total Current Liabilities	$	25,143,382		$	-		$	25,143,382
Long-term portion of note payables		5,072,493			-			5,072,493
Reclamation liability		20,289,527			(4,574,949	)		15,714,578
Total Liabilities		50,505,402			(4,574,949	)		45,930,453
Class A Common stock		118			-			118
Series A Preferred stock		482			-			482
Series B Preferred stock		850			-			850
APIC		19,816,567			-			19,816,567
Accumulated Deficit		(50,265,183	)		3,094,549			(47,170,635	)
Total American Resources Corporation Shareholders’ Deficit		(30,447,166	)		3,094,549			(27,352,617	)
Non Controlling Interest		-			-			-
Total Liabilities and Shareholders’ Deficit	$	20,058,236		$	(1,480,400	)	$	18,577,836

Schedule of income statement

Income Statement	For the Nine Months Ended September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Revenue
Total Revenue	$	23,386,684		$	-		$	23,386,684
Cost of Coal Sales and Processing		(18,214,195	)		-			(18,214,195	)
Accretion Expense		(1,435,295	)		318,545			(1,116,751	)
Depreciation		(1,779,539	)		(151,835	)		(1,931,374	)
Amortization of mining rights		(181,385	)		-			(181,385	)
General and Administrative		(3,892,596	)		-			(3,892,596	)
Professional Fees		(1,106,864	)		-			(1,106,864	)
Production Taxes and Royalties		(2,217,156	)		-			(2,217,156	)
Development Costs		(3,429,512	)		-			(3,429,512	)
Net Loss from Operations	$	(8,869,858	)	$	166,710		$	(8,703,149	)
Other Income, net		879,705			-			879,705
Net Loss	$	(7,990,153	)	$	166,710		$	(7,823,444	)
Less: Preferred dividend requirement		(104,157	)		-			(104,157	)
Less: Net income attributable to Non Controlling Interest		(151,278	)		-			(151,278	)
Net loss attributable to American Resources Corporation Shareholders	$	(8,245,588	)	$	166,710		$	(8,078,879	)

Income Statement	3 Months Ended September 30, 2018
	As Previously
	Reported			Adjustment		As Restated
Revenue
Total Revenue	$	9,038,268		$	-	$	9,038,268
Cost of Coal Sales and Processing		(7,116,009	)		-		(7,116,009	)
Accretion Expense		(539,771	)		106,182		(433,589	)
Depreciation		(735,190	)		34,595		(700,595	)
Amortization of mining rights		(181,385	)		-		(181,385	)
General and Administrative		(2,320,287	)		-		(2,320,287	)
Professional Fees		(707,735	)		-		(707,735	)
Production Taxes and Royalties		(759,269	)		-		(759,269	)
Development Costs		(945,341	)		-		(945,341	)
Net Loss from Operations	$	(4,266,719	)	$	140,777	$	(4,125,942	)
Other Income (loss)		570,287			-		570,287
Net Loss	$	(3,696,432	)	$	140,777	$	(3,555,655	)
Less: Preferred dividend requirement		(17,000	)		-		(17,000	)
Less: Net income attributable to Non Controlling Interest		-			-		-
Net loss attributable to American Resources Corporation Shareholders	$	(3,713,432	)	$	140,777	$	(3,572,655	)

Schedule of cash flow

Statement of Cash Flow	For the Nine Months Ended September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Cash Flows from Operating activities:
Net loss	$	(7,990,153	)	$	166,710		$	(7,823,443	)
Adjustments to reconcile net loss to net cash
Depreciation		1,779,539			151,835			1,931,374
Amortization of mining rights		181,385						181,385
Gain on cancellation of debt		(315,000	)		-			(315,000	)
Accretion expense		1,435,295			(318,545	)		1,116,751
Amortization of debt discount and issuance costs		420,134			-			420,134
Recovery of advances receivable		(92,573	)		-			(92,573	)
Gain on disposition		(807,591	)		-			(807,591	)
Stock option expense		13,410			-			13,410
Warrant expense		234,067			-			234,067
Share compensation expense		201,250			-			201,250
Change in current assets and liabilities		864,080			-			864,080
Cash used in operating activities	$	(4,076,157	)		-			(4,076,157	)
Cash used in investing activities		(5,235	)		-			(5,235	)
Cash provided by financing activities		4,039,509			-			4,039,509
Decreased in cash and restricted cash		(41,883	)		-			(41,883	)
Cash and restricted cash, beginning of year		385,665			-			385,665
Cash and restricted cash, end of year	$	343,782		$	-		$	343,782

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PROPERTY AND EQUIPMENT (Details 1)	9 Months Ended
	Sep. 30, 2019
Underground equipment [Member]
Estimated useful lives	5 years
Surface equipment [Member]
Estimated useful lives	7 years
Coal Refuse Storage [Member]
Estimated useful lives	25 years
Mining Rights [Member] | Minimum [Member]
Estimated useful lives	5 years
Mining Rights [Member] | Maximum [Member]
Estimated useful lives	25 years
Processing and rail facilities [Member]
Estimated useful lives	20 years

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CONTINGENCIES (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended	9 Months Ended
	Feb. 10, 2019	Jan. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Nov. 07, 2018
Future annual rent			$ 6,000			$ 6,000
Rent expense						$ 24,000	$ 24,000
Frequency of periodic payment						Month-to-month
Gain on reclamation settlement	$ (3,075)	$ (19,585)	(19,585)	$ (19,585)
Annual rent maturity date						through 2021
seller note			2,500,000			$ 2,500,000
KCC [Member]
Gain on reclamation settlement						100,000
Kentucky Energy Cabinet [Member]
Claims amounts						783,340
Account payable			2,155,970			2,155,970
Mine Health Safety [Member]
Claims amounts						654,928
Account payable			580,628			580,628
November Seven [Member]
Reclamation bond						234,240
seller note			$ 350,000			350,000
Transfer fees						$ 10,500
common stock share

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash Flows from Operating activities
Net loss	$ (30,870,759)	$ (7,823,444)
Adjustments to reconcile loss to net cash
Depreciation	(3,036,747)	(1,931,374)
Amortization of mining rights	1,592,110	181,385
Accretion expense	(962,699)	(1,116,751)
Cancelation of debt		(315,000)
Gain on disposition		(807,591)
Recovery of previously impaired receipts	(50,806)	(92,573)
Amortization of debt discount	7,722,197	420,134
Warrant expense	2,528,598	234,067
Warrant modification expense	2,545,360
Option expense	245,356	13,410
Issuance of common shares for services	1,806,040	201,250
Change in current assets and liabilities:
Accounts receivable	1,300,654	(930,478)
Inventory	(840,526)	188,371
Prepaid expenses and other assets	(335,174)	(147,826)
Accounts payable	(2,274,582)	973,057
Funds held for others	(79,662)	(19,061)
Due to affiliates	164,526	512,378
Accrued interest	858,406	287,639
Cash used in operating activities	(11,688,816)	(4,076,157)
Cash Flows from Investing activities:
Advances made in connection with management agreement		(99,582)
Advance repayment in connection with management agreement		222,304
Cash paid for PPE, net	(327,250)	(127,957)
Cash received in asset acquisitions	650,000
Cash provided by (used in) investing activities	322,750	(5,235)
Cash Flows from Financing activities:
Principal payments on long term debt	(2,548,111)	(2,064,902)
Proceeds from long term debt	5,139,399	5,316,977
Proceeds from convertible debt	399,980
Proceeds from related party	8,639
Net proceeds from (payments to) factoring agreement	(1,087,413)	787,434
Sale of common stock for cash in connection with public offering	4,354,000
Sale of common stock for cash issued with warrants in connection with public offering	3,409,600
Cash provided by financing activities	9,676,094	4,039,509
Decrease in cash and restricted cash	(1,689,972)	(41,883)
Cash and restricted cash, beginning of period	2,704,799	385,665
Cash and restricted cash, end of period	1,014,827	343,782
Supplemental Information
Cash paid for interest	389,437	156,331
Cash paid for income taxes
Non-cash investing and financing activities
Shares issued in asset acquisition	24,400,000
Assumption of net assets and liabilities for asset acquisitions	8,787,748	2,217,952
Equipment for notes payable		906,660
Conversion of accounts payable into common shares	231,661
Beneficial Conversion Feature on note payable due to modification	7,362,925
Preferred Series B dividends		104,157
Shares issued in connection with note payable	297,831
Conversion of Series A Preferred into common shares	161
Conversion of Series C Preferred into common shares	1
Return of shares related to employee settlement	11
Forgiveness of accrued management fee		$ 17,840,615
Warrant exercise for common shares	$ 60

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CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash	$ 716,840	$ 2,293,107
Accounts Receivable	71,580	1,338,680
Inventory	1,004,326	163,800
Prepaid fees	483,000	147,826
Accounts Receivable - Other	336,800	319,548
Total Current Assets	2,612,546	4,262,961
OTHER ASSETS
Cash - restricted	297,987	411,692
Processing and rail facility	14,496,487	11,630,171
Underground equipment	10,155,915	8,717,229
Surface equipment	3,224,896	3,101,518
Acquired mining rights	28,831,440	2,913,241
Coal refuse storage	12,171,271	11,993,827
Less Accumulated Depreciation	(11,320,116)	(6,691,259)
Land	3,248,169	907,193
Note Receivable	4,117,139	4,117,139
Total Other Assets	65,223,188	37,100,751
TOTAL ASSETS	67,835,734	41,363,712
CURRENT LIABILITIES
Accounts payable and accrued liabilities	7,483,079	8,139,662
Accounts payable - related party	639,180	474,654
Accrued interest	1,977,142	1,118,736
Funds held for others	0	82,828
Due to affiliate	132,639	124,000
Current portion of long term-debt (net of issuance costs and debt discount of $0 and $134,296)	14,691,696	14,169,139
Current portion of convertible debt	7,219,612
Current portion of reclamation liability	2,327,169	2,327,169
Total Current Liabilities	34,470,517	26,433,022
OTHER LIABILITIES
Long-term portion of note payable (net of issuance costs of $420,062 and $428,699)	4,829,330	7,918,872
Reclamation liability	21,425,097	16,211,640
Total Other Liabilities	26,254,427	24,134,512
Total Liabilities	60,724,944	50,563,534
STOCKHOLDERS' EQUITY (DEFICIT)
AREC - Class A Common stock: $.0001 par value; 230,000,000 shares authorized, 27,267,197 and 17,763,469 shares issued and outstanding, respectively	2,726	1,776
Additional paid-in capital	90,094,006	42,913,532
Accumulated deficit	(82,985,942)	(52,115,183)
Total American Resources Corporation's Stockholders' Equity (Deficit)
Total Stockholders' Equity (Deficit)	7,110,790	(9,199,822)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	67,835,734	41,363,712
Series A Preferred Stock [Member]
Total American Resources Corporation's Stockholders' Equity (Deficit)
AREC - Series A Preferred stock: $.0001 par value; 5,000,000 shares authorized, 0 and 481,780 shares issued and outstanding, respectively		48
Series C Preferred Stock [Member]
Total American Resources Corporation's Stockholders' Equity (Deficit)
AREC - Series C Preferred stock: $.001 par value; 20,000,000 shares authorized, 0 and 50,000 shares issued and outstanding, respectively		$ 5

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PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
PROPERTY AND EQUIPMENT (Details Narrative)
Depreciation expense	$ (1,414,942)	$ (700,595)	$ (3,036,747)	$ (1,931,374)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4)
Beginning Balance			$ 18,538,806
Accretion ? nine months September 30, 2019	$ (320,900)	$ (433,589)	(962,699)	$ (1,116,751)
Reclamation work ? nine months September 30, 2019
Asset disposition
Gold Star Acquisition			1,300,000
Perry County Acquisition			2,950,761
Ending Balance	$ 23,752,266		$ 23,752,266

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)
Cash	$ 716,840	$ 2,293,107	$ 57,739
Restricted Cash	297,987	$ 411,692	286,043
Total cash and restricted cash presented in the consolidated statement of cash flows	$ 297,987		$ 343,782

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NOTES PAYABLE (Details Narrative) - USD ($)			1 Months Ended						3 Months Ended		6 Months Ended	9 Months Ended
	Aug. 09, 2019	Aug. 06, 2019	Sep. 27, 2019	Aug. 16, 2019	Jul. 25, 2019	May 31, 2018	Sep. 25, 2017	Sep. 08, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Aug. 27, 2019	May 30, 2019	May 07, 2019	Feb. 20, 2019
Principal payments on long term debt								$ (2,064,902)				$ (2,548,111)	$ (2,064,902)
Interest rate	11.00%		4.00%
Increases to long term debt totaled								5,316,977				8,039,379
Inventory line of credit												$ 500,000
Common shares issued on note payable				300,000								25,000
Additional promissory note draw		$ 250,000		$ 300,000
Promissory note draw	$ 250,000
Proceeds from the factoring agreement								23,100,358				$ 16,710,922
Description of acquisition												The Empire acquisition loan totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property.
Payments on factoring agreement, net								22,312,924				$ 17,798,335
Proceeds from long term debt												$ 5,139,399	5,316,977
Common stock price per share									$ 0.01		$ 0.01	$ 0.01			$ 3.49	$ 3.65
Interest payment												$ 50,000
Amortized discount									$ 219,218			7,722,197
ARC Development Loan [Member]
Principal payments on long term debt					$ 400,000
Proceeds from long term debt												$ 3,500,000
Common stock price per share									$ 11.00		$ 11.00	$ 11.00
Maturity date												Jul. 30, 2019
Annual interest rate					12.00%				5.00%		5.00%	5.00%
Accrued interest									$ 7,362,925		$ 7,362,925	$ 7,362,925
Conversion price									$ 5.25		$ 5.25	$ 5.25
Amortized discount											$ 2,863,360	$ 7,362,925
Beneficial conversion feature amount												7,362,925
Seller Financing [Member]
Proceeds from long term debt												$ 2,500,000
Seller Note[Member]
Interest rate									0.00%		0.00%	0.00%
Promissory note issued non related party												$ 600,000
Payment due on demand												$ 350,000
Payments description												the remaining $250,000 will be paid with monthly payments based on $1 per ton of coal to originate from the assets acquired, commencing November 1, 2019. $150,000 was paid in January 2019.
Maturity date												May 07, 2019
Equipment Purchase Agreement [Member]
Maturity date							Sep. 25, 2019	Apr. 01, 2019
Annual interest rate							0.00%		0.00%		0.00%	0.00%
Payments certain underground mining equipment							$ 350,000	$ 600,000
Agreement provided paid upon execution												$ 80,000
Monthly payments							$ 20,000	$ 30,000
Sales Financing Arrangement ARC[Member]
Promissory note issued non related party						$ 752,535
Maturity date						Jan. 31, 2019
Annual interest rate						33.00%
Quest Energy Inc [Member]
Interest rate			5.25%
Interest payment												$ 3,304
Maturity date												Jul. 31, 2019

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EQUITY TRANSACTIONS (Detail 1)	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Average Contractual Life [Member]
Beginning Exercisable weighted Average	1 year 84 months 15 days
Outstanding Balance Weighted Average	1 year 84 months 15 days
Exercisable Ending Weighted Average	2 years 102 months 18 days
Ending Balance Weighted Average	2 years 102 months 18 days
Aggregate Intrinsic [Member]
Outstanding Balance Intrinsic | $	$ 42,063,228
Ending Exercisable Intrinsic | $	1,633,863
Beginning Exercisable Intrinsic | $	42,063,228
Ending Balance Intrinsic | $	$ 1,633,863
Weighted Average [Member]
Beginning Outstanding Exercise | $ / shares	$ 2.745
Exercisable beginning Exercise | $ / shares	2.745
Exercised | $ / shares
Ending Balance Exercise | $ / shares	1.831
Forfeited or Expired | $ / shares
Granted | $ / shares	2.516
Ending Exercisable Exercise | $ / shares	$ 1.831
Option [Member]
Beginning Outstanding Warrant | shares	70,000
Beginning Exercisable Warrant | shares	681,830
Granted | shares	7,450,900
Exercised | shares	600,000
Forfeited or Expired | shares	1,697,223
Ending Balance Warrant | shares	10,698,904
Exercisable Ending Warrant | shares	10,698,904

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CORRECTION OF PRIOR YEAR INFORMATION (Details 1) - USD ($)	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Total Revenue	$ 1,847,279	$ 9,038,268		$ 18,183,681	$ 23,386,684
Accretion ? nine months September 30, 2019	(320,900)	(433,589)		(962,699)	(1,116,751)
Depreciation expense	(1,414,942)	(700,595)		(3,036,747)	(1,931,374)
General and Administrative	(1,434,545)	(2,320,287)		(3,798,051)	(3,892,596)
Professional Fees	(170,937)	(707,735)		(5,136,767)	(1,106,864)
Production Taxes and Royalties	(948,148)	(759,269)		(2,811,691)	(2,217,156)
Development Costs	(1,425,024)	(945,341)		(5,912,589)	(3,429,512)
Net Loss from Operations	(7,076,252)	(4,125,942)		(20,321,934)	(8,703,149)
Net Loss	(7,344,532)	(3,555,655)		(30,870,759)	(7,823,444)
Less: Preferred dividend requirement	70,157			0
Less: Net income attributable to Non Controlling Interest					(151,278)
Net loss attributable to American Resources Corporation Shareholders	$ (7,344,532)	(3,572,655)		(30,870,759)	(8,078,879)
Amortization of mining rights				$ 1,592,110	181,385
Adjustment [Member]
Total Revenue
Cost of Coal Sales and Processing
Accretion ? nine months September 30, 2019					(318,545)
Depreciation expense					151,835
General and Administrative		34,595
Professional Fees
Production Taxes and Royalties
Development Costs
Net Loss from Operations		140,777			166,710
Other Expense, net
Net Loss		140,777			166,710
Less: Preferred dividend requirement
Less: Net income attributable to Non Controlling Interest
Net loss attributable to American Resources Corporation Shareholders		140,777			166,710
Amortization of mining rights		106,182
As Previously Reported [Member]
Total Revenue		9,038,268			23,386,684
Cost of Coal Sales and Processing		(7,116,009)			(18,214,195)
Accretion ? nine months September 30, 2019		(539,771)			1,435,295
Depreciation expense		(735,190)			(1,779,539)
Amortization of mining right		(181,385)			(181,385)
General and Administrative		(2,320,287)			(3,892,596)
Professional Fees		(707,735)			(1,106,864)
Production Taxes and Royalties		(759,269)			2,217,156
Development Costs		(945,341)			(3,429,512)
Net Loss from Operations		(4,266,719)			(8,869,858)
Other Expense, net		570,287			879,705
Net Loss		(3,696,432)			(7,990,153)
Less: Preferred dividend requirement		(17,000)			(104,157)
Less: Net income attributable to Non Controlling Interest					(151,278)
Net loss attributable to American Resources Corporation Shareholders		(3,713,432)			(8,245,588)
As Restated [Member]
Total Revenue		9,038,268			23,386,684
Cost of Coal Sales and Processing		(7,116,009)			(18,214,195)
Accretion ? nine months September 30, 2019		(433,589)			1,116,751
Depreciation expense		(700,595)			1,913,374
General and Administrative		(2,320,287)			(3,892,596)
Professional Fees		(707,735)			(1,106,864)
Production Taxes and Royalties		(759,269)			(2,217,156)
Development Costs		(945,341)			(3,429,512)
Net Loss from Operations		(4,125,942)			(8,703,149)
Other Expense, net		570,287			879,705
Net Loss		(3,555,655)			(7,823,444)
Less: Preferred dividend requirement		(17,000)			(104,157)
Less: Net income attributable to Non Controlling Interest					(151,278)
Net loss attributable to American Resources Corporation Shareholders		(3,572,655)			(8,078,879)
Amortization of mining rights		$ (181,385)			$ (181,385)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2019

Schedule of restricted cash and cash equivalents

	September 30, 2019		September 30, 2018
Cash	$	716,840	$	57,739
Restricted Cash		297,987		286,043
Total cash and restricted cash presented in the consolidated statement of cash flows	$	1,014,827	$	343,782

Schedule of Asset Retirement Obligations

Balance at December 31, 2018	$	18,538,806
Accretion – nine months September 30, 2019		962,699
Reclamation work – nine months September 30, 2019		-
Asset disposition		-
Gold Star Acquisition		1,300,000
Perry County Acquisition		2,950,761
Balance at September 30, 2019	$	23,752,266

LC Energy Operations, LLC [Member]

Schedule of assets acquired and liabilities assumed

Assets
Cash	$	400,000
Restricted Cash		250,000
Surface Equipment		10,574
Processing and Loading Facility		639,426
Liabilities
Reclamation liability	$	1,300,000

Perry County Coal, LLC [Member]

Schedule of assets acquired and liabilities assumed

Assets
Coal Inventory	$	651,698
Mine Development		518,199
Coal Refuse		177,444
Land		840,976
Underground Equipment		863,053
Surface Equipment		4,688
Processing and Loading Facility		1,444,596
Liabilities
Reclamation liability	$	2,950,761
Accrued liabilities		2,036,987

Empire Coal [Member]

Schedule of assets acquired and liabilities assumed

Assets
Acquired Mining Rights	$	25,400,000
Land		1,500,000
Liabilities
Seller Note	$	2,500,000

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CORRECTION OF PRIOR YEAR INFORMATION

9 Months Ended

Sep. 30, 2019

CORRECTION OF PRIOR YEAR INFORMATION

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 September 30, 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 June 30, 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 September 30, 2018. Reclassifications of prior periods have been made to conform with current year presentation

The following table presents the impact of the correction in the financial statements as of September 30, 2018:

Balance Sheet	As of September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Assets
Total Current Assets	$	3,536,324		$	-		$	3,536,324
Cash - restricted		286,043			-			286,043
Processing and Rail Facility		2,802,855			(279,647	)		2,523,208
Underground Equipment		9,346,692			(1,633,897	)		7,712,795
Surface Equipment		4,532,724			(1,126,208	)		3,406,516
Acquired Mining Rights		2,036,567			641,518			2,678,085
Less Accumulated Depreciation		(6,600,108	)		917,834			(5,682,275	)
Land		-			-			-
Accounts Receivable - Other		-			-			-
Note Receivable		4,117,139			-			4,117,139
Total Assets	$	20,058,236		$	(1,480,400	)	$	18,577,836
Liabilities and Shareholders' deficit
Total Current Liabilities	$	25,143,382		$	-		$	25,143,382
Long-term portion of note payables		5,072,493			-			5,072,493
Reclamation liability		20,289,527			(4,574,949	)		15,714,578
Total Liabilities		50,505,402			(4,574,949	)		45,930,453
Class A Common stock		118			-			118
Series A Preferred stock		482			-			482
Series B Preferred stock		850			-			850
APIC		19,816,567			-			19,816,567
Accumulated Deficit		(50,265,183	)		3,094,549			(47,170,635	)
Total American Resources Corporation Shareholders’ Deficit		(30,447,166	)		3,094,549			(27,352,617	)
Non Controlling Interest		-			-			-
Total Liabilities and Shareholders’ Deficit	$	20,058,236		$	(1,480,400	)	$	18,577,836

Income Statement	For the Nine Months Ended September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Revenue
Total Revenue	$	23,386,684		$	-		$	23,386,684
Cost of Coal Sales and Processing		(18,214,195	)		-			(18,214,195	)
Accretion Expense		(1,435,295	)		318,545			(1,116,751	)
Depreciation		(1,779,539	)		(151,835	)		(1,931,374	)
Amortization of mining rights		(181,385	)		-			(181,385	)
General and Administrative		(3,892,596	)		-			(3,892,596	)
Professional Fees		(1,106,864	)		-			(1,106,864	)
Production Taxes and Royalties		(2,217,156	)		-			(2,217,156	)
Development Costs		(3,429,512	)		-			(3,429,512	)
Net Loss from Operations	$	(8,869,858	)	$	166,710		$	(8,703,149	)
Other Income, net		879,705			-			879,705
Net Loss	$	(7,990,153	)	$	166,710		$	(7,823,444	)
Less: Preferred dividend requirement		(104,157	)		-			(104,157	)
Less: Net income attributable to Non Controlling Interest		(151,278	)		-			(151,278	)
Net loss attributable to American Resources Corporation Shareholders	$	(8,245,588	)	$	166,710		$	(8,078,879	)

Income Statement	3 Months Ended September 30, 2018
	As Previously
	Reported			Adjustment		As Restated
Revenue
Total Revenue	$	9,038,268		$	-	$	9,038,268
Cost of Coal Sales and Processing		(7,116,009	)		-		(7,116,009	)
Accretion Expense		(539,771	)		106,182		(433,589	)
Depreciation		(735,190	)		34,595		(700,595	)
Amortization of mining rights		(181,385	)		-		(181,385	)
General and Administrative		(2,320,287	)		-		(2,320,287	)
Professional Fees		(707,735	)		-		(707,735	)
Production Taxes and Royalties		(759,269	)		-		(759,269	)
Development Costs		(945,341	)		-		(945,341	)
Net Loss from Operations	$	(4,266,719	)	$	140,777	$	(4,125,942	)
Other Income (loss)		570,287			-		570,287
Net Loss	$	(3,696,432	)	$	140,777	$	(3,555,655	)
Less: Preferred dividend requirement		(17,000	)		-		(17,000	)
Less: Net income attributable to Non Controlling Interest		-			-		-
Net loss attributable to American Resources Corporation Shareholders	$	(3,713,432	)	$	140,777	$	(3,572,655	)

Statement of Cash Flow	For the Nine Months Ended September 30, 2018
	As Previously
	Reported			Adjustment			As Restated
Cash Flows from Operating activities:
Net loss	$	(7,990,153	)	$	166,710		$	(7,823,443	)
Adjustments to reconcile net loss to net cash
Depreciation		1,779,539			151,835			1,931,374
Amortization of mining rights		181,385						181,385
Gain on cancellation of debt		(315,000	)		-			(315,000	)
Accretion expense		1,435,295			(318,545	)		1,116,751
Amortization of debt discount and issuance costs		420,134			-			420,134
Recovery of advances receivable		(92,573	)		-			(92,573	)
Gain on disposition		(807,591	)		-			(807,591	)
Stock option expense		13,410			-			13,410
Warrant expense		234,067			-			234,067
Share compensation expense		201,250			-			201,250
Change in current assets and liabilities		864,080			-			864,080
Cash used in operating activities	$	(4,076,157	)		-			(4,076,157	)
Cash used in investing activities		(5,235	)		-			(5,235	)
Cash provided by financing activities		4,039,509			-			4,039,509
Decreased in cash and restricted cash		(41,883	)		-			(41,883	)
Cash and restricted cash, beginning of year		385,665			-			385,665
Cash and restricted cash, end of year	$	343,782		$	-		$	343,782

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PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2019

PROPERTY AND EQUIPMENT

NOTE 2 - PROPERTY AND EQUIPMENT

At September 30, 2019 and December 31, 2018, property and equipment were comprised of the following:

	September 30, 2019			December 31, 2018
Processing and rail facility	$	14,496,487		$	11,630,171
Underground equipment		10,155,915			8,717,229
Surface equipment		3,224,896			3,101,518
Acquired mining rights		28,831,440			2,913,241
Coal refuse storage		12,171,271			11,993,827
Land		3,248,169			907,193
Less: Accumulated depreciation		(11,320,116	)		(6,691,259	)
Total Property and Equipment, Net	$	60,808,062		$	32,571,920

Depreciation expense amounted to $1,414,942 and $700,595 for the three month periods September 30, 2019 and September 30, 2018, respectively. Depreciation expense amounted to $3,036,747 and $1,931,374 for the nine month periods September 30, 2019 and September 30, 2018, respectively.

The estimated useful lives are as follows:

Processing and Rail Facilities	20 years
Surface Equipment	7 years
Underground Equipment	5 years
Mining Rights	5-25 years
Coal Refuse Storage	25 years

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Coal Sales	$ 1,847,279	$ 8,890,322	$ 18,162,805	$ 23,219,222
Processing Services Income		147,946	20,876	167,462
Total Revenue	1,847,279	9,038,268	18,183,681	23,386,684
Cost of Coal Sales and Processing	(2,956,306)	(7,116,009)	(15,254,961)	(18,214,195)
Accretion Expense	(320,900)	(433,589)	(962,699)	(1,116,751)
Depreciation	(1,414,942)	(700,595)	(3,036,747)	(1,931,374)
Amortization of mining rights	(252,729)	(181,385)	(1,592,110)	(181,385)
General and Administrative	(1,434,545)	(2,320,287)	(3,798,051)	(3,892,596)
Professional Fees	(170,937)	(707,735)	(5,136,767)	(1,106,864)
Production Taxes and Royalties	(948,148)	(759,269)	(2,811,691)	(2,217,156)
Development Costs	(1,425,024)	(945,341)	(5,912,589)	(3,429,512)
Total Operating Expenses	(8,923,531)	(13,164,210)	(38,505,615)	(32,089,833)
Net Loss from Operations	(7,076,252)	(4,125,942)	(20,321,934)	(8,703,149)
Other Income	770,405	875,942	1,251,359	1,295,065
Gain on cancelation of debt				315,000
Loss on settlement of payable			(22,660)
Receipt of previously impaired receivable				92,573
Amortization of debt discount and issuance costs	(219,218)		(7,722,197)
Interest Income	82,343		164,686	41,171
Warrant Modification Expense			(2,545,360)
Interest expense	(901,810)	(305,655)	(1,674,653)	(864,104)
Total other income (expense)	(268,280)	570,287	(10,548,825)	879,705
Net Loss	(7,344,532)	(3,555,655)	(30,870,759)	(7,823,444)
Less: Series B dividend requirement		(17,000)		(104,157)
Less: Net income attributable to Non Controlling Interest				(151,278)
Net loss attributable to American Resources Corporation Shareholders	$ (7,344,532)	$ (3,572,655)	$ (30,870,759)	$ (8,078,879)
Net loss per common share - basic and diluted	$ (0.30)	$ (3.44)	$ (1.34)	$ (8.58)
Weighted average common shares outstanding	24,886,763	1,038,783	23,025,762	941,495

XML

PROPERTY AND EQUIPMENT (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Less Accumulated Depreciation	$ (11,320,116)	$ (6,691,259)
Total Property and Equipment, Net	60,808,062	32,571,920
Underground equipment [Member]
Property and equipment	10,155,915	8,717,229
Surface equipment [Member]
Property and equipment	3,224,896	3,101,518
Acquired Mining Rights [Member]
Property and equipment	28,831,440	2,913,241
Coal Refuse Storage [Member]
Property and equipment	12,171,271	11,993,827
Processing and rail facilities [Member]
Property and equipment	14,496,487	11,630,171
Land [Member]
Property and equipment	$ 3,248,169	$ 907,193

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1)	Sep. 30, 2019 USD ($)
Assets
Acquired Mining Rights	$ 25,400,000
Land	1,500,000
Liabilities
Seller Note	$ 2,500,000

XML

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2019

SUBSEQUENT EVENTS

NOTE 9 - SUBSEQUENT EVENTS

During October, 2019, the Company amended the noted related to the PCR asset acquisition to increase the available funds to draw from $1,850,000 to $2,010,547. Additional funds totaling $1,760,547 were drawn from the note related to the PCR asset acquisition. These funds were used to fund payroll related costs. The due date of the note was amended from September 27, 2020 to April 17, 2020.

During October, 2019, the Company issued 70,238 common shares to an unrelated party in accordance with the make whole provision under an investor relations agreement.

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MANAGEMENT AGREEMENT

9 Months Ended

Sep. 30, 2019

MANAGEMENT AGREEMENT

NOTE 5 - MANAGEMENT AGREEMENT

On April 13, 2015, ERC entered into a mining and management agreement with an unrelated entity, to operate a coal mining and processing facility in Jasonville, Indiana. Under the management agreement, net funds advanced for the nine-month period ended September 30, 2019 and 2018 are $92,085 and $99,582, respectively and the amounts repaid totaled $92,085 and $127,957, respectively. During the nine-month period ended September 30, 2019 and 2018, fees paid under the agreement amounted $340,915 and $313,114, respectively which has been recorded in other income. The mining and management agreement was terminated on September 20, 2019.

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EQUITY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2019

EQUITY TRANSACTIONS (Tables)

Schedule of Stockholders' Equity Note, Warrants

	September 30, 2019
Expected Dividend Yield		0	%
Expected volatility	87.97-97.29		%
Risk-free rate	1.4–1.62		%
Expected life of warrants	.43 – 7.75 years

Schedule of assumptions used to messure fair value of warrants/rights

WARRANTS
December 31, 2018 to September 30, 2019
			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Outstanding - December 31, 2018		5,545,227	$	2.745		1.704	$	42,063,228
Exercisable - December 31, 2018		5,545,227	$	2.745		1.704	$	42,063,228
Granted		7,450,900	$	2.516		-	$	-
Forfeited or Expired		1,697,223	$	7.638		-	$	-
Exercised		600,000	$	0.010		-	$	-
Outstanding - September 30, 2019		10,698,904	$	1.831		2.855	$	1,633,863
Exercisable - September 30, 2019		10,698,904	$	1.831		2.855	$	1,633,863

OPTIONS
December 31, 2018 to September 30, 2019
			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding - December 31, 2018		681,830	$	1.413		6.447	$	405,000
Exercisable - December 31, 2018		70,000	$	4.214		4.247	$	405,000
Granted		375,000	$	3.105		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - September 30, 2019		1,056,830	$	1.960		6.250	$	-
Exercisable - September 30, 2019		273,943	$	1.821		5.324	$	-

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MANAGEMENT AGREEMENT (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Payment for fees under the agreement amount	$ 340,915	$ 313,114
Advances made in connection with management agreement		(99,582)
ERC [Member]
Advances made in connection with management agreement	(92,085)	(99,582)
Advance repayment in connection with management agreement	$ 92,085	$ 127,957

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EQUITY TRANSACTIONS (Details Narrative) - USD ($)										1 Months Ended												3 Months Ended					6 Months Ended	9 Months Ended
	Jun. 13, 2019	Jun. 12, 2019	Jun. 07, 2019	Jun. 05, 2019	May 07, 2019	Mar. 07, 2019	Feb. 12, 2019	Feb. 10, 2019	Feb. 06, 2019	Aug. 27, 2019	May 30, 2019	Feb. 21, 2019	Feb. 20, 2019	Feb. 14, 2019	Jan. 31, 2019	Jan. 30, 2019	Jan. 28, 2019	Jan. 27, 2019	Jan. 25, 2019	Jan. 17, 2019	Jan. 16, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Aug. 16, 2019	Jun. 06, 2019	Dec. 31, 2018
Stock price per share					$ 3.65						$ 3.49											$ 0.01						$ 0.01
Warrant expense																												$ 2,528,598	$ 234,067
Offering cost																						$ 356						356
Net proceeds																												$ 4,098
Warrant issued																						445,400						445,400
Settlement expense					$ 182,500
Stock interest expense											$ 87,250
Stock issued during period, shares								500
Employee stock compensation expense																						$ 73,603				$ 0	0	$ 142,296
Share price of stock issued to settle trade payables								$ 12.15														$ 0.001						$ 0.001
Issuance of warrants to consultants																												$ 2,385,000
Expense by common stock shares																			$ 1,575,000
Trade payables								$ 3,000
Loss on settlement								$ 3,075							$ 19,585							$ 19,585	$ 19,585
Preferred dividend requirement																						70,157						0
Amortized expenses																						$ (802,590)						(1,339,381)
Stock-based compensation																												$ 1,806,040
Common stock, par value																						$ 0.001						$ 0.001				$ 0.0001
Debt discount																						$ 219,218						$ 7,722,197
Series A Preferred Stock [Member]
Stock issued during period, shares														1,509,097
Preferred Stock, Shares Issued														452,729								0						0				481,780
Series C Preferred Stock [Member]
Stock issued during period, shares
Preferred Stock, Shares Issued												50,000										0						0				50,000
Conversion of Series C into common stock												13,750
Common Class A [Member]
Net proceeds						$ 558,000				$ 3,409,600			$ 3,695,000
Common stock, par value						$ 4.00							$ 4																	$ 1.04		$ 0.0001
Common stock, shares issued						150,000							1,000,000																	300,000		17,763,469
Exercise price						4.40							4.40
Debt discount																						$ 210,581
Conjunction common stock										3,600,000
Class of warrants or rights issued						10,500							70,000
Class of warrants or rights issued, value						$ 23,100							$ 123,000
Warrants expiration date						Feb. 15, 2021							Feb. 15, 2021
Offering costs										$ 370,400			$ 447,000
Employee [Member] | Stock Option Plan [Member]
Employee stock compensation expense				$ 4,910
Amortized expenses				$ 353,500
Common stock, shares issued				175,000
Vesting period				3 years
Unrelated Party [Member]
Expense by common stock shares															$ 97,200
Trade payables																						$ 23,502						$ 23,502
Common stock, par value																$ 10.80						$ 11.00						$ 11.00
Common stock, shares issued																						3,917						3,917
Common shares, price per share			$ 2.10																			$ 6						$ 6
Common stock shares issued for cash																	400	1,000
Common stock value issued for cash																	$ 2,000	$ 5,000
Contingent liability																						$ 23,502						$ 23,502
Common shares, price per share															If at the time of potential sale of the shares, the listed price per share is below $6, the Company is required to purchase the shares back at $6 per share
Unrelated Party [Member] | February 1, 2019 [Member]
Common stock shares issued for cash																												1,000
Common stock value issued for cash																												$ 5,000
Unrelated Party [Member] | Consulting Agreement [Member] | July 01, 2019 [Member]
Warrant expense			$ 139,500
Warrant issued			75,000																			540,000						540,000
Stock-based compensation	$ 70,840
Term of consulting agreement	The term of the consulting agreement is 6 months with monthly payments equal to $5,000 payable in months three through six of the agreement.																											The options vest equally over an 8 year term
Common stock, shares issued	28,000																					200,000						200,000
Exercise price																												3.52
Issuance of common shares for services, shares			30,000
Warrant exercise period			3 years
Strike price			$ 4
Expense by consulting services			$ 63,000
Common shares, price per share	$ 2.53
Unrelated Parties [Member]
Cash consideration							$ 500,000
Issuance of common shares for asset acquisition							2,000,000
Closing market price per share							$ 12.20
Promissory note							$ 2,000,000
Maturity date description							less than 1 year
Unrelated Parties [Member] | On February 4 through February 8, 2019 [Member]
Stock issued during period, shares																												17,800
Cash consideration																												$ 89,000
Unrelated Parties [Member] | ARC Business Loan [Member] | Warrant [Member]
Term of warrant description		the Company restructured a series of warrants; C-1, C-2, C-3 and C-4, held by an unrelated party as part of the ARC business loan which resulted in an increase in the number of warrants issued from 1.6 million shares across four warrants to 3.0 million shares across four warrants; an increase in the term of the warrants from the date of the amendment from a weighted average of 297 days to 753 days, and a decrease in the weighted average exercise price from $7.665 per share to $4.325 per share. Fair value was determined using the Black-Scholes Option Pricing Model.
Redstone Communications LLC [Member] | Consulting Agreement [Member] | Restricted Stock Units (RSUs) [Member]
Exercise price																			1.50
Stock issued during period, shares																			105,000
Maturity period																			5 years
Description for the extension of agreement																			On January 25, 2019, the Company extended its consulting agreement with Redstone Communications, LLC for an additional six-month term
Redstone Communications LLC [Member] | Consulting Agreement [Member] | Stock options [Member]
Proceeds receivable from warrants or rights if exercised																			$ 262,500
Common stock shares reserved for future issuance																			175,000
Mr. Marlin Molinaro [Member] | Consulting Agreement [Member] | Restricted Stock Units (RSUs) [Member]
Exercise price																			1.50
Stock issued during period, shares																			45,000
Maturity period																			5 years
Mr. Marlin Molinaro [Member] | Consulting Agreement [Member] | Stock options [Member]
Common stock, par value																			$ 10.50
Proceeds receivable from warrants or rights if exercised																			$ 112,500
Common stock shares reserved for future issuance																			75,000
Non-affiliated shareholder [Member] | Warrant [Member]
Convertible securities, shares converted									300,000											300,000
Common stock issued upon conversion									299,714											299,713
An affiliate [Member] | Series A Preferred Stock [Member]
Convertible securities, shares converted																					29,051
Common stock issued upon conversion																					96,837
Equity Purchase Agreement [Member]
Stock price per share			$ 2.10
Common stock, shares issued			25,000
Common stock price per share			$ 4
Issuance of common shares for cash consideration			$ 100,000
Settlement Agreement [Member]
Common stock, shares issued																															107,000
Investor Relations Agreement [Member] | American Capital Ventures, Inc. [Member]
Stock issued during period, shares																9,000
Term of agreement																6 months

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PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2019

PROPERTY AND EQUIPMENT

Property, Plant and Equipment

	September 30, 2019			December 31, 2018
Processing and rail facility	$	14,496,487		$	11,630,171
Underground equipment		10,155,915			8,717,229
Surface equipment		3,224,896			3,101,518
Acquired mining rights		28,831,440			2,913,241
Coal refuse storage		12,171,271			11,993,827
Land		3,248,169			907,193
Less: Accumulated depreciation		(11,320,116	)		(6,691,259	)
Total Property and Equipment, Net	$	60,808,062		$	32,571,920

Property, Plant and Equipment, Estimated Useful Lives

Processing and Rail Facilities	20 years
Surface Equipment	7 years
Underground Equipment	5 years
Mining Rights	5-25 years
Coal Refuse Storage	25 years

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CONTINGENCIES

9 Months Ended

Sep. 30, 2019

CONTINGENCIES

NOTE 8 - 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.

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 $783,340, the Company has accrued $2,155,970 as a payable to the Commonwealth of Kentucky including amounts owed to the Kentucky Energy Cabinet. Claims assessed by the Mine Health Safety Administration totaling $654,928 of which the Company has accrued $580,628 as a payable.

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. Subsequent to the balance sheet date, WCC has paid the delinquent transfer fees and has filed for permit transfer. 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. 

The Empire acquisition loan in conjunction with the Empire Kentucky Land merger totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. This note is currently in default and the company received a breach of contract notice in September 2019.

On August 21, 2018, Deane and an unrelated vendor entered into a settlement agreement for past payables. Pursuant to the settlement agreement, Deane will pay the full outstanding unpaid balance in accordance with the agreed to schedule, with the full amount being due on January 3, 2019. Deane is currently in default of this agreement.

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 is still in pending settlement talks.

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 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 principal office space expired in December 31, 2018 and is continuing on a month-to-month basis. The future annual rent is $6,000 through 2021. Rent expense for nine-month period ending September 30, 2019 and 2018 amounted to $24,000 and $24,000 each period, respectively.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2019

RELATED PARTY TRANSACTIONS

NOTE 4 - RELATED PARTY TRANSACTIONS

The Company leases property from a related entity named Land Resources & Royalties (LRR). 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 in the consolidated financial statements. For the three-month and nine-month period ending September 30, 2019, royalty expense incurred with LRR amounted to $112,107 and $231,685 respectively. Additionally, amounts advanced from LRR amounted to $31,507 and amounts repaid to LRR amounted to $100,000. As of September 30, 2019, total amounts owed LRR amounted to $639,180.

The Company has a coal sales commission agreement with a coal brokerage firm partially owned by a director of the company. Total amounts owed to the coal brokerage firm as of September 30, 2019 were $110,858, of which $29,677 were incurred during 2019.

The Company has in the past borrowed funds from affiliates including officers. These amounts are unsecured, due on demand and non-interest bearing. Amounts outstanding as of September 30, 2019 and December 31, 2018 totaled $132,639 and $124,000, respectively. The company repaid related party loans to an officer in the amount of $9,861.

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EQUITY TRANSACTIONS (Details)	6 Months Ended
	Jun. 30, 2019
Expected Dividend Yeild	0.00%
Minimum [Member]
Expected volatility	87.97%
Risk-free rate	1.40%
Expected life of warrants	5 months 5 days
Maximum [Member]
Expected volatility	97.29%
Risk-free rate	1.62%
Expected life of warrants	7 years 9 months

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CORRECTION OF PRIOR YEAR INFORMATION (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Mar. 31, 2018
Liabilities and Shareholders' deficit
Total Current Assets	$ 2,612,546	$ 4,262,961
Cash - restricted	297,987	411,692
Processing and Rail Facility	14,496,487	11,630,171
Underground Equipment	10,155,915	8,717,229
Land	3,248,169	907,193
Note Receivable	4,117,139	4,117,139
Total Assets	67,835,734	41,363,712
Total Current Liabilities	34,470,517	26,433,022
Long-term portion of note payables	4,829,330	7,918,872
Reclamation liability	21,425,097	16,211,640
Total Liabilities	60,724,944	50,563,534
APIC	90,094,006	42,913,532
Accumulated Deficit	(82,985,942)	(52,115,183)
Total Liabilities and Shareholders’' Deficit	67,835,734	41,363,712
Common stock	2,726	1,776
Series A Preferred Stock [Member]
Liabilities and Shareholders' deficit
Total American Resources Corporation Shareholders' Equity			$ 482	$ 482
Preferred stock		$ 48
As Previously Reported [Member]
Liabilities and Shareholders' deficit
Total Current Assets			3,536,324
Cash - restricted			286,043
Processing and Rail Facility			2,802,855
Underground Equipment			9,346,692
Surface Equipment			4,532,724
Mining Rights			2,036,567
Less Accumulated Depreciation			(6,600,108)
Land
Accounts Receivable - Other
Note Receivable			4,117,139
Total Assets			20,058,236
Total Current Liabilities			25,143,382
Long-term portion of note payables			5,072,493
Reclamation liability			20,289,527
Total Liabilities			50,505,402
APIC			19,816,567
Accumulated Deficit			(50,265,183)
Total American Resources Corporation Shareholders' Equity			(30,447,166)
Non Controlling Interest
Total Liabilities and Shareholders’' Deficit			20,058,236
As Previously Reported [Member] | Series A Preferred Stock [Member]
Liabilities and Shareholders' deficit
Preferred stock			482
As Previously Reported [Member] | Common Class A [Member]
Liabilities and Shareholders' deficit
Common stock			118
As Previously Reported [Member] | Series B Preferred Stock [Member]
Liabilities and Shareholders' deficit
Preferred stock			850
As Restated [Member]
Liabilities and Shareholders' deficit
Total Current Assets			3,536,324
Cash - restricted			286,043
Processing and Rail Facility			2,523,208
Underground Equipment			7,712,795
Surface Equipment			3,406,516
Mining Rights			2,678,085
Less Accumulated Depreciation			(5,682,275)
Land
Accounts Receivable - Other
Note Receivable			4,117,139
Total Assets			18,577,836
Total Current Liabilities			25,143,382
Long-term portion of note payables			5,072,493
Reclamation liability			15,714,578
Total Liabilities			45,930,453
APIC			19,816,567
Accumulated Deficit			(47,170,635)
Total American Resources Corporation Shareholders' Equity			(27,352,617)
Non Controlling Interest
Total Liabilities and Shareholders’' Deficit			18,577,836
As Restated [Member] | Series A Preferred Stock [Member]
Liabilities and Shareholders' deficit
Preferred stock			482
As Restated [Member] | Common Class A [Member]
Liabilities and Shareholders' deficit
Common stock			118
As Restated [Member] | Series B Preferred Stock [Member]
Liabilities and Shareholders' deficit
Preferred stock			850
Adjustment [Member]
Liabilities and Shareholders' deficit
Total Current Assets
Cash - restricted
Processing and Rail Facility			(279,647)
Underground Equipment			(1,633,897)
Surface Equipment			(1,126,208)
Mining Rights			641,518
Less Accumulated Depreciation			917,834
Land
Accounts Receivable - Other
Note Receivable
Total Assets			(1,480,400)
Total Current Liabilities
Long-term portion of note payables
Reclamation liability			(4,574,949)
Total Liabilities			(4,574,949)
APIC
Accumulated Deficit			3,094,549
Total American Resources Corporation Shareholders' Equity			3,094,549
Non Controlling Interest
Total Liabilities and Shareholders’' Deficit			(1,480,400)
Adjustment [Member] | Series A Preferred Stock [Member]
Liabilities and Shareholders' deficit
Preferred stock
Adjustment [Member] | Common Class A [Member]
Liabilities and Shareholders' deficit
Common stock
Adjustment [Member] | Series B Preferred Stock [Member]
Liabilities and Shareholders' deficit
Preferred stock

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CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($)	Total	Common Shares Shares	Preferred Series A Shares	Preferred Series C Shares	APIC	Accumulated Deficit	Non-controlling Interest
Beginning Balance, shares at Dec. 31, 2017		892,044	4,817,792	850,000
Beginning Balance, amount at Dec. 31, 2017	$ (37,165,226)	$ 89	$ 482	$ 850	$ 1,527,254	$ (39,091,757)	$ 397,856
Net loss	(2,570,649)					(2,699,163)	128,514
Series Preferred B Dividend Requirement, shares
Series Preferred B Dividend Requirement, amount	(70,157)					(70,157)
Beginning Balance, shares at Mar. 31, 2018		892,044	4,817,792	850,000
Beginning Balance, amount at Mar. 31, 2018	(39,806,032)	$ 89	$ 482	$ 850	1,527,254	(41,861,077)	526,370
Net loss	(1,697,138)					(1,719,902)	22,764
Series Preferred B Dividend Requirement, shares
Forgiveness of accrued management fee, shares
Series Preferred B Dividend Requirement, amount	(17,000)					(17,000)
Forgiveness of accrued management fee, amount	17,840,615				17,840,615
Beginning Balance, shares at Jun. 30, 2018		892,044	4,817,792	850,000
Beginning Balance, amount at Jun. 30, 2018	(23,679,555)	$ 89	$ 482	$ 850	19,367,869	(43,597,979)	549,134
Issuance of common shares for services, shares		300,000
Net loss	(3,555,655)					(3,555,655)
Series Preferred B Dividend Requirement, shares
Warrants issued for services, shares
Option Expense, shares
Consolidation of VIE, shares
Issuance of common shares for services, amount	201,250	$ 29			201,221
Series Preferred B Dividend Requirement, amount	(17,000)					(17,000)
Warrants issued for services, amount	234,067				234,067
Option Expense, amount	13,410				13,410
Consolidation of VIE, amount	(549,134)						(549,134)
Beginning Balance, shares at Sep. 30, 2018		1,192,044	4,817,792	850,000
Beginning Balance, amount at Sep. 30, 2018	(27,352,617)	$ 118	$ 482	$ 850	19,816,567	(47,170,634)
Beginning Balance, shares at Dec. 31, 2018		17,763,469	481,780	50,000
Beginning Balance, amount at Dec. 31, 2018	(9,199,822)	$ 1,776	$ 48	$ 5	42,913,532	(52,115,183)
Issuance of common shares for cash, shares		1,170,200
Issuance of common shares for services, shares		159,000
Issuance of common shares for asset acquisition, shares		2,000,000
Issuance of common shares for conversion of debt and accounts payable, shares		4,417
Issuance of warrants to consultants, shares
Stock option expense
Issuance of common shares for warrant exercise, shares		599,427
Conversion of Series A Preferred into common stock, shares		1,605,934	(481,780)
Conversion of Series C into common stock, shares		13,750		(50,000)
Net loss	(14,565,185)					(14,565,185)
Issuance of common shares for cash, net, amount	4,254,000	117			4,253,883
Issuance of common shares for services, amount	1,672,200	16			1,672,184
Issuance of common shares for asset acquisition, amount	24,400,000	200			24,399,800
Issuance of common shares for conversion of debt and accounts payable, amount	49,161				49,161
Issuance of warrants to consultants, amount	2,385,000				2,385,000
Stock option expense, amount	68,693				68,693
Issuance of common shares for warrant exercise, amount		60			(60)
Conversion of Series A Preferred into common stock, amount		161	(48)		(113)
Conversion of Series C into common stock, amount		1		(5)	4
Beneficial conversion on note payable due to modification, amount	7,362,925				7,362,925
Beginning Balance, shares at Mar. 31, 2019		23,316,197
Beginning Balance, amount at Mar. 31, 2019	16,426,972	$ 2,331			83,105,009	(66,680,368)
Issuance of common shares for services, shares		58,000
Issuance of warrants to consultants, shares
Stock option expense
Issuance of common shares for cash, net, shares		25,000
Issuance of common shares for conversion of accounts payable, shares		50,000
Common shares issued in connection with note payable, shares		25,000
Cancellation of common shares, shares		(107,000)
Warrant modification Expense, shares
Net loss	(8,961,042)					(8,961,042)
Issuance of common shares for cash, net, amount	100,000	3			99,997
Issuance of common shares for services, amount	133,840	6			133,834
Issuance of warrants to consultants, amount	139,500				139,500
Stock option expense, amount	73,603				73,603
Issuance of common shares for conversion of accounts payable, amount	182,500	5			182,495
Common shares issued in connection with note payable, amount	87,250	3			87,247
Cancellation of common shares, amount		(11)			11
Warrant modification Expense, amount	2,545,360				2,545,360
Beginning Balance, shares at Jun. 30, 2019		23,367,197
Beginning Balance, amount at Jun. 30, 2019	10,727,983	$ 2,337			86,367,056	(75,641,410)
Stock option expense
Net loss	(7,344,532)					(7,344,532)
Issuance of common shares and warrants issued for public offering, net, shares		3,600,000
Common shares issued in connection with note payable, shares		300,000
Underwriter Warrants, shares
Stock option expense, amount	103,060				103,060
Issuance of common shares and warrants issued for public offering, net, amount	3,409,600	359			3,409,241
Common shares issued in connection with note payable, amount	210,581	30			210,551
Underwriter Warrants, amount	4,098				4,098
Beginning Balance, shares at Sep. 30, 2019		27,267,197
Beginning Balance, amount at Sep. 30, 2019	$ 7,110,790	$ 2,726			$ 90,094,006	$ (82,985,942)

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 14, 2019
Document And Entity Information
Entity Registrant Name	American Resources Corp
Entity Central Index Key	0001590715
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2019
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019
Entity Ex Transition Period	false
Entity Common Stock Shares Outstanding		27,337,435

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NOTES PAYABLE

9 Months Ended

Sep. 30, 2019

NOTES PAYABLE

NOTE 3 - NOTES PAYABLE

During the nine-month period ended September 30, 2019, principal payments on long term debt totaled $2,548,111. During the nine-month period ended September 30, 2019, increases to long term debt totaled $8,039,379, primarily from cash received in the form of $3,500,000 from the ARC development loan, $2,500,000 from seller financing for the acquisition of Empire and $500,000 from an inventory line of credit.

The ARC development loan carries annual interest at 5%, is due on April 1, 2020 and is secured by all company assets.

The Empire acquisition loan totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. This note is currently in default and the company received a breach of contract notice in September 2019.

The inventory line of credit was dated May 30, 2019, is due July 30, 2019 and carries a $50,000 interest payment upon maturity. The company also issued 25,000 shares as consideration for the inventory line of credit. This note is currently in default. This note is also convertible into common shares. It was determined that no beneficial conversion feature was present as of September 30, 2019. The inventory line of credit is secured by the underlying inventory.

On July 25, 2019, the Company drew an additional $400,000 on the ARC Business Loan. The advance is to be repaid in weekly $100,000 payments commencing on August 9, 2019 with the full balance being due September 30, 2019. The amount is outstanding as is now due on 30 days demand. The advance carries a 12% interest rate. The ARC Business Loan is secured by a substantially all of the corporate assets.

On August 9, 2019, the Company entered into a $500,000 promissory note with a non-related entity. The note bears interest at 11% and is due by September 15, 2019. On August 6, 2019, $250,000 was drawn on the promissory note. On August 9, 2019, $250,000 was drawn on the promissory note. On August 16, 2019, an additional $300,000 was drawn on the promissory note. The note included 300,000 common shares resulting in a relative fair value calculation discount of $210,581 which is amortized over the term of the note. This note is currently in default. The note is secured by specific equipment

On September 27, 2019, the Company entered into a promissory note with a non-related entity for an amount up to $1,850,000 in conjunction with the PCR asset acquisition but separate from the assumed liabilities. $250,000 was drawn on this note as of September 30, 2019. The note bears interest at 4% and is due in full on September 27, 2020. The note was subsequently amended on October 18, 2019 the increase the full amount of the borrowing to $2,010,547. The note is unsecured. The initial draw was to be used for closing costs and the remaining tranches are to be used for payroll and payroll related expenses. The note carries restrictive covenants outlined in the note agreement.

On September 8, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $600,000. The note carries 0% interest and is due April 1, 2019. The agreement provided for $80,000 paid upon execution, $30,000 monthly payments until the balance is paid in full. The note is secured by the equipment purchased. This note is currently in default. In the event that any monthly payment is more than ten days past due, the lender shall have the right to declare the borrower in default of the note and may declare the remaining future payments due and owing under the note agreement immediately due and owing and may immediately proceed to collect the same and or take possession of the equipment.

On July 31, 2015, the Company entered into an equipment lease payable with an unrelated company in 48 equal payments of $3,304 with an interest rate of 5.25% with a balloon payment at maturity of July 31, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 5. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. This note is currently in default.

On September 25, 2017, the Company entered into an equipment purchase Agreement, which carries 0% interest with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $350,000. The agreement provided for $20,000 monthly payments until the balance is paid in full. The note matured on September 25, 2019, and is now in default. The note is secured by the equipment purchased with the note.

Sales Financing Arrangement ARC         

During May 2018, the company entered into a financing arrangement with two unrelated parties. The notes totaled $2,859,500, carried an original issue discount of $752,535, interest rate of 33% and have a maturity date of January 2019 and are secured by future receivables as well as personal guarantees of two officers of the company. This note is currently in default. Upon default the agreement calls for all future sales to be applied first to the outstanding loan.

Seller Note – Wyoming County         

In conjunction with the asset acquisition, the Company issued a $600,000 promissory note payable to an unrelated company. See note 1. $350,000 is due on demand and the remaining $250,000 will be paid with monthly payments based on $1 per ton of coal to originate from the assets acquired, commencing November 1, 2019. $150,000 was paid in January 2019. The note was due on May 7, 2019, is unsecured and carries interest at 0%. This note is currently in default. Upon the occurrence of any Event of Default, the holder hereof may, at its option, (a) declare the entire unpaid principal of this Note immediately due and payable without notice, demand or presentment, all of which are hereby waived, and upon such declaration, the same shall become and shall be immediately due and payable, (b) foreclose the security interests created by the Loan Documents, (c) offset against this Note any sum or sums owed by the holder hereof to Maker, and (d) take any and all other actions available to Payee under this Note, at law, in equity or otherwise.      

During the nine-month period ended September 30, 2018, principal payments on long term debt totaled $2,064,902. During the nine-month period ended September 30, 2018, increases to long term debt totaled $5,316,977.

During the nine-month period ended September 30, 2019, proceeds from the factoring agreement totaled $16,710,922 and repayments totaled $17,798,335.

During the nine-month period ended September 30, 2018, proceeds from the factoring agreement totaled $23,100,358 and repayments totaled $22,312,924.

On February 4, 2019, the ARC business loan was amended to allow for an initial three-month due date extension and will subsequently be due on 30 days demand. As part of this amendment, a conversion into company common stock was also added. The balance at conversion including accrued interest totaled $7,362,925. The conversion price is $5.25 and the common stock price at the time of the amended was $11.00. The addition of the beneficial conversion feature created a discount in the amount of $7,362,925 which is amortized into interest expense over the three-month extension period. Additional expense due to the amortization of the discount for the three-month period ended June 30, 2019 amounted to $2,863,360 and for the six-month period amounted to $7,362,925, respectively. The Company analyzed the conversion options in the convertible loan payables for derivative accounting consideration under ASC 815, Derivative and Hedging, and determines that the transactions do not qualify for derivative treatment. The Company evaluated the conversion for Beneficial Conversion Features (BCF) and concluded the amendment incurred a Beneficial Conversion Features (BCF) when it was issued on February 4, 2019.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)		1 Months Ended		3 Months Ended		9 Months Ended
	Nov. 07, 2018	Sep. 27, 2019	Aug. 16, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Feb. 12, 2019	Dec. 31, 2018
Issuance of common shares for asset acquisition, shares						2,000,000
Issuance of common shares for asset acquisition, value						$ 24,400,000
Additional fees and charges						2,000,000
Restricted cash				$ 297,987		297,987			$ 411,692
Amortization expense				145,733		677,333	$ 0
Allowance for trade receivables
Allowance for other accounts receivables
Funds held for others				$ 0		$ 0			$ 82,828
Revenue from sales to steel industrial industry				93.00%	44.00%	57.00%	62.00%
Revenue from sales to utility generation industry				7.00%	56.00%	43.00%	38.00%
Acquisition cost						$ 1,300,000
seller note				$ 2,500,000		$ 2,500,000
Two Customer [Member]
Revenue percentage				93.00%	71.00%	82.00%	85.00%
Three Customer [Member]
Revenue percentage						82.00%	85.00%
One Customer [Member]
Revenue percentage				93.00%	71.00%
Outstanding accounts receivable percentage				99.00%		99.00%			99.00%
Asset Acquisitions [Member]
Acquired assets anticipated life years						25 years
Capitalized mining rights amortized life years						25 years
Asset Acquisitions [Member] | Colonial Coal Company, Inc [Member]
Ownership percentages								100.00%
Asset Acquisitions [Member] | Kentucky New Markets Development Program [Member]
Restricted cash				$ 47,987		$ 47,987
Asset management fee reserve						116,115
Gold Star [Member]
Retirement obligations		$ 4,987,748	$ 1,300,000
Acquisition cost			$ 400,000
Wyoming County Coal LLC [Member]
Reclamation bonds shares	1,727,273
seller note	$ 350,000
Reclamation bonds amount	234,240
Transfer fees	$ 10,500
Lender Reserve Account [Member]
Restricted cash									$ 58,246
Empire Coal Holdings, LLC [Member] | Asset Acquisitions [Member] | Colonial Coal Company, Inc [Member] | Seller Note One [Member]
Seller note payable								$ 2,000,000
Cash Payment								$ 500,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details2) - USD ($)	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Assets
Cash	$ 716,840	$ 2,293,107	$ 57,739
Restricted Cash	297,987	$ 411,692	$ 286,043
LC Energy [Member]
Assets
Cash	400,000
Restricted Cash	250,000
Surface Equipment	10,574
Processing and Loading Facility	639,426
Liabilities
Reclamation liability	$ 1,300,000