10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: March 31, 2023

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.)

12115 Visionary Way Fishers, Indiana 46038

(Address and Zip Code of principal executive offices) 

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

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

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

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

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

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

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

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

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

As of May 15, 2023, the registrant had 78,213,454 shares of Class A common stock issued and outstanding.

AMERICAN RESOURCES CORPORATION

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements		3
	Condensed Consolidated Balance Sheets (Unaudited)		4
	Condensed Consolidated Statements of Operation (Unaudited)		5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three Months ended March 31, 2023 and 2022 (unaudited)		6
	Condensed Consolidated Statements of Cash Flows (Unaudited)		7
	Notes to Unaudited Condensed Consolidated Financial Statements		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		27
Item 4.	Controls and Procedures		28
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		29
Item 1A.	Risk Factors		29
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds		29
Item 3.	Defaults upon Senior Securities		29
Item 4.	Mine Safety Disclosures		29
Item 5.	Other Information		29
Item 6.	Exhibits		30
SIGNATURES			32

2

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

AMERICAN RESOURCES CORPORATION

CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

(UNAUDITED)

For the three months ended

March 31, 2023

3

AMERICAN RESOURCES CORPORATION 

CONDENSED CONSOLIDATED BALANCE SHEETS 

UNAUDITED

	March 31, 2023			December 31, 2022
ASSETS
CURRENT ASSETS
Cash	$	297,245		$	8,868,566
Accounts Receivable		1,694,929			660,755
Inventory		2,959,511			446,690
Prepaid fees		797,076			786,576
Total Current Assets		5,748,761			10,762,587
OTHER ASSETS
Cash - restricted		2,123,216			2,122,263
Property and equipment, net		9,303,457			9,113,722
Long-term right of use assets, net		12,913,548			13,033,889
Investment in LLC – Related Party		19,308,593			20,784,866
Note Receivable		99,022			99,022
Total Other Assets		43,747,836			45,153,762
TOTAL ASSETS	$	49,496,597		$	55,916,349
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Trade payable	$	4,305,293		$	4,916,243
Non-Trade Payables		2,685,008			2,524,243
Accounts payable – related party		3,005,044			4,295,232
Accrued interest		110,705			106,886
Current portion of long term-debt		839,730			1,917,506
Convertible note payables		-			9,787,423
Current portion of lease liabilities, net		3,962,155			3,889,235
Total Current Liabilities		21,843,507			27,436,768
OTHER LIABILITIES
Remediation liability		20,543,925			20,295,634
Lease liabilities, net		6,696,914			7,899,251
Total Other Liabilities		27,240,839			28,194,885
Total Liabilities		42,148,774			55,631,653
STOCKHOLDERS’ DEFICIT
Common stock: $.0001 par value; 230,000,000 shares authorized, 76,197,850 and 66,777,620 shares issued and outstanding		7,622			6,680
Additional paid-in capital		177,680,313			167,517,259
Accumulated deficit		(170,340,112	)		(167,239,243	)
Total Stockholders’ Equity (Deficit)		7,347,823			284,696
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	49,496,597		$	55,916,349

The accompanying footnotes are integral to the unaudited consolidated financial statements

4

AMERICAN RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

	For the three months ended			For the three months ended
	March 31, 2023			March 31, 2022
Coal Sales	$	8,723,185		$	9,031,259
Metal recovery and sales		20,609			37,226
Royalty Income		124,662			12,137
Total Revenue		8,868,456			9,080,622
Cost of Coal Sales and Processing		(2,705,820	)		(2,890,858	)
Accretion Expense		(248,291	)		(267,622	)
Depreciation		(13,336	)		(626,042	)
Amortization of Mining Rights		(305,859	)		(303,394	)
General and Administrative		(1,321,468	)		(1,020,814	)
Professional Fees		(293,255	)		(350,938	)
Production Taxes and Royalties		(981,636	)		(819,477	)
Development Costs		(5,633,908	)		(6,784,188	)
Total Operating expenses		(11,503,573	)		(13,063,333	)
Net Loss from Operations		(2,635,117	)		(3,983,711	)
Other Income and (expense)
Other Income		93,000			82,156
Gain on cancelation of debt		-			1,521,304
Amortization of debt discount and debt issuance costs		-			-
Interest Income		17,212			10,045
Interest expense		(575,964	)		(383,696	)
Total Other income (expense)		(465,752	)		1,229,809
Net Loss		(3,100,869	)		(2,752,902	)
Less:  Net Loss attributable to Non controlling interest					(7,884	)
Net loss attributable to American Resources Corp. Shareholders		-			(2,745,018	)
Net loss per common share - basic and diluted	$	(0.04	)	$	(0.04	)
Weighted average common shares outstanding- basic and diluted		72,953,104			65,253,533

The accompanying footnotes are integral to the unaudited consolidated financial statements

5

AMERICAN RESOURCES CORPORATION

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

FOR THE PERIOD FROM JANUARY 1, 2023 THROUGH MARCH 31, 2023 AND JANUARY 1, 2022 THROUGH MARCH 31, 2022

UNAUDITED

March 31, 2022 

	American Resources
	Common Stock										Non
	Par value			0.0001				Accumulated			controlling
	Shares		Amount		APIC			Deficit			interest			Total
Shares issued in connection with warrant conversions		187,250		19		280,856									280,875
Amortization of beneficial conversion features						(40,655	)								(40,655	)
Shares issued in connection with debt conversions		884,229		89		1,006,637									1,006,726
Amortization of Warrant and Stock Option Expense						199,843									199,843
Net Loss									(2,745,018	)		(7,884	)		(2,752,902	)
Balance March 31, 2022		66,156,471		6,616		164,888,336			(168,538,589	)		(7,884	)		(3,651,521	)

March 31, 2023 

	American Resources
	Common Stock
	Par value			0.0001			Accumulated
	Shares		Amount		APIC		Deficit			Total
Shares issued in connection with warrant conversions		9,420,230		942		9,786,481					9,787,423
Amortization of Warrant and Stock Option Expense						376,573					376,573
Net Loss								(3,100,869	)		(3,100,869	)
Balance March 31, 2023		76,197,850		7,622		177,680,313		(170,340,112	)		10,448,692

The accompanying footnotes are integral to the unaudited consolidated financial statements

6

AMERICAN RESOURCES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

	For the three months ended			For the three months ended
	March 31, 2023			March 31, 2022
Cash Flows from Operating activities:
Net loss	$	(3,100,869	)	$	(2,752,902	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on forgiveness of debt		-			(1,521,304	)
Depreciation		13,336			626,042
Amortization of mining rights		305,859			303,394
Accretion expense		248,291			267,622
Accretion of right of use assets		107,895			2,899
Warrant expense		376,573			199,843
Issuance of common share options for compensation		-			-
Amortization of beneficial conversion feature		-			-
Issuance of common shares for services		-			-
Change in current assets and liabilities:
Accounts receivable		(1,034,174	)		319,312
Prepaid expenses and other assets		(10,500	)		(951,410	)
Inventory		(2,512,821	)		(1,236,065	)
Accounts payable		(450,185	)		(393,866	)
Accounts payable related party		(1,290,188	)		(691,607	)
Accrued interest		3,819			94,435
Cash provided by (used in) operating activities		(7,342,964	)		(5,733,607	)
Cash Flows from Investing activities:
Cash paid for PPE, net		(508,930	)		(724,900	)
Capitalized interest		-			267,875
Cash invested in notes receivable		-			(335,000	)
Investment in LLC		1,476,273			-
Cash provided by (used in) investing activities		967,343			(792,025	)
Cash Flows from Financing activities:
Principal payments on long term debt		(1,077,778	)		(39,559	)
Principal payments on finance lease		(1,116,969	)		-
Proceeds from convertible note		-			-
Proceeds from warrant conversions		-			280,875
Proceeds from sale of common stock, net		-			-
Cash provided by financing activities		(2,194,747	)		241,316
Increase (decrease) in cash and restricted cash		(8,570,638	)		(6,284,316	)
Cash and restricted cash, beginning of period		10,990,829			12,588,113
Cash and restricted cash, end of period	$	2,420,461		$	6,303,797
Supplemental Information
Non-cash investing and financing activities
Conversion of debt to common shares	$	-		$	1,006,726
Discount on note due to beneficial conversion feature	$	-		$	-
Cash paid for interest	$	64,094		$	3,726

The accompanying footnotes are integral to the unaudited consolidated financial statements

7

AMERICAN RESOURCES CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Presentation and Consolidation:

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

Entities for which ownership is less than 100% a determination is made whether there is a requirement to apply the variable interest entity (VIE) model to the entity. Where the company holds current or potential rights that give it the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, combined with a variable interest that gives the Company the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company would be deemed to have a controlling interest.

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

Interim Financial Information

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. In the opinion of management, these interim unaudited Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any other period. These financial statements should be read in conjunction with the Company’s 2022 audited financial statements and notes thereto which were filed on form 10-K on March 31, 2023.

8

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

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

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

Cash, Cash Equivalents and Restricted cash:  

9

The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that agrees to the total of those amounts as presented in the consolidated statement of cash flows for the three months ended March 31, 2023 and March 31, 2022:

	March 31, 2023		March 31, 2022
Cash	$	297,245	$	5,217,204
Restricted Cash		2,123,216		1,086,593
Total cash and restricted cash presented in the consolidated statement of cash flows	$	2,420,461	$	6,303,797

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

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

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

The table below reflects the changes to our ARO:

Balance at December 31, 2022	$	18,951,587
Accretion – 3 months March 31, 2023		1,344,047
Reclamation work – 3 months March 31, 2023		-
Balance at March 31, 2023	$	20,295,634
Balance at December 31, 2021	$	18,951,587
Accretion – 3 months March 31, 2022		267,622
Reclamation work – 3 months March 31, 2022		-
Balance at March 31, 2022	$	19,219,209

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

Allowance for trade receivables as of March 31, 2023 and December 31, 2022 amounted to $0, for both periods. Allowance for other accounts receivables as of March 31, 2023 and December 31, 2022 amounted to $1,888,070 and $1,744,570, respectively.

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of March 31, 2023 and December 31, 2022.

Prepaid Fees and Advance Royalties: Coal leases that require minimum annual or advance payments and are recoverable from future production are generally deferred and charged to expense as the coal is subsequently produced.

Inventory: Inventory consisting of mined coal is stated at the lower of cost (first in, first out method) or net realizable value.

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

10

NOTE 2 - PROPERTY AND EQUIPMENT

At March 31, 2023 and December 31, 2022, property and equipment were comprised of the following:

	March 31, 2023			December 31, 2022
Processing and rail facility	$	508,930		$	-
Underground equipment		-			-
Surface equipment		-			-
Coal refuse storage		12,134,192			12,134,192
Mine Development		561,575			561,575
Land		1,617,435			1,572,435
Less: Accumulated depreciation		(319,195	)		(5,199,478	)
Total Property and Equipment, Net	$	9,303,459		$	9,113,724

Depreciation expense amounted to $319,195 and $393,530 for the period March 31, 2023 and March 31, 2022, respectively.

The estimated useful lives are as follows:

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

NOTE 3 - NOTES PAYABLE

During the three-month period ended March 31, 2023, principal reductions on long term debt totaled $1,077,776, primarily due to payments of the Integrity loan. During the three-month period ended March 31, 2023, increases to long term debt totaled $0. On January 31, 2023, the remaining amounts of the convertible notes in the amount of $9,891,241 was converted into 9,420,230 common shares of the Company.  Extinguishing all future liabilities under the convertible note.

During the three-month period ended March 31, 2022, principal reductions on long term debt totaled $1,564,684, primarily due to debt forgiveness of PPP loan. During the three-month period ended March 31, 2022, increases to long term debt totaled $0. The notes have a minimum offering amount of $12,500,000 and maximum of $25,000,000 and minimum investment of $500,000. The notes carry a 24-month term, 12.5% interest 10% warrant coverage and a conversion price of $1.05. The warrants have an exercise price of $1.50. 

11

NOTE 4 – RIGHT OF USE ASSETS AND LEASES

The right-of-use asset is the Company’s right to use an asset over the life of a lease. The asset is calculated as the initial amount of the lease liability, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received.

The Company’s discounted lease payment rate is 10.82%. 

Our principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038. We pay $5,726 per month in rent for the office space and the rental lease expires December 2026. On January 1, 2023, the Company entered into an expansion lease for the site. The amended lease has a ten-year term and $5,869 per month rate.

We also rent office space from an affiliated entity, LRR, at 11000 Highway 7 South, Kite, Kentucky 41828 and pay $1,702 per month rent and the rental lease expires January 1, 2030.

On August 17, 2022, ReElement entered into a Commercial Land Lease sublease agreement with Land Betterment for nearly 7 acres of land for the purpose of building a commercial grade critical element purification facility. The sublease is for the period of 5 years with a rate of $3,500 a month.

On October 8, 2022, ReElement entered into a Commercial Lease for 6,700 square feet of warehouse space for the purpose of building a commercial grade critical element purification facility. The is for the period of 2 years with a rate of $4,745.83 a month.

At March 31, 2023, right of use assets and liabilities were comprised of the following:

	March 31, 2023				March 31, 2022
	Asset		Liability		Asset		Liability
Operating Leases		613,094		617,892		704,627		776,424
Finance Leases		12,300,454		10,236,296		-		-

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NOTE 5 - RELATED PARTY TRANSACTIONS

Land Resources & Royalties

The Company leases property from Land Resources & Royalties (LRR), an entity controlled by certain members of the Company’s management who are also directors and shareholders. Until July 1, 2018, LRR was consolidated as a VIE resulting in transaction between the two companies to be eliminated upon consolidation. Upon deconsolidation, amounts paid and owed to LRR have been disclosed discreetly in the consolidated financial statements. For the three-month period ending March 31, 2023, royalty expense incurred with LRR amounted to $100,610.  As of March 31, 2023, total amounts owed LRR amounted to $192,742. For the three-month period ending March 31, 2022, royalty expense incurred with LRR amounted to $57,135. As of March 31, 2022, total amounts owed LRR amounted to $0.

Land Betterment Corp

On February 13, 2022, the Company entered into a Contract Services Agreement with Land Betterment Corporation, an entity controlled by certain members of the Company’s management who are also directors and shareholders. The contract terms state that service costs are passed through to the Company with a 12.5% mark-up and a 50% share of cost savings which includes payroll covering aforementioned members of the Company’s management. The services agreement covers all of the Company’s properties. For the 3 months ended March 31, 2023 amounts incurred under the agreement amounted to $959,018 and amounts paid totaled $2,403,040. As of March 31, 2023, amounts payable under the agreement amounted to $3,244,901. For the 3 months ended March 31, 2022 amounts incurred under the agreement amounted to $1,574,015 and amounts paid totaled $839,280. As of March 31, 2022, amounts payable under the agreement amounted to $2,793,658. For the 3 months ended March 31, 2023 and 2022, service charges covering members of the Company’s management amounted to $0, respectively.

American Opportunity Venture, LLC

During January 2022, the company invested $2,250,000 for 50% ownership and become the managing member of American Opportunity Venture, LLC. (AOV) It has been determined that AOV is a variable interest entity and that the Company is not primary beneficiary. As such, the investment in AOV will be accounted for using the equity method of accounting.

American Opportunity Venture II, LLC

During March 2022, the Company invested $25,000 for 100% ownership and become the managing member of American Opportunity Venture II, LLC. (AOVII). As such, the investment in AOVII has been eliminated in the accompanying financial statements. As of March 31, 2022, AOVII has had no operational activity.

Novusterra, Inc.

During March 2021, the Company licensed certain technology to an unrelated entity, Novusterra, Inc. According to the commercial terms of the license, the Company is to receive 50% of future cash flows and 15,750,000 common shares of Novusterra, Inc. During August 22, 2022, the Company sold the licensed patents to Novusterra, Inc. All prior licensing obligations were voided upon the sale.  It has been determined that Novusterra is a variable interest entity and that the Company is not the primary beneficiary. As such, the investment in Novusterra will be accounted for using the equity method of accounting. . As of March 31, 2023, Novusterra has had no operational activity.

Land Betterment Exchange (LBX)

The Company is the holder of 2,000,000 LBX Tokens with a par value of $250 for each token. The token issuance process is undertaken by a related party, Land Betterment, and is predicated on proactive environmental stewardship and regulatory bond releases. As of March 31, 2023, there is no market for the LBX Token and therefore no value has been assigned.

FUB Mineral LLC

On October 1, 2022, the Company invested $250,000 into FUB Mineral, LLC a company with common owners. 

NOTE 6 – EQUITY TRANSACTIONS

Employee stock compensation expense for the three-month period ending March 31, 2023 and 2022 amounted to $376,573 and $199,843 respectively.

13

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

On March 31, 2022, the Company issued 884,229 class A common shares pursuant to the conversion of $1,006,726 of accrued interest.

Warrant Exercises

On January 13, 2022, the Company issued 117,250 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $1.50.

On March 30, 2022, the Company issued 47,500 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $1.50.

On March 31, 2022, the Company issued 22,500 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $1.50.

New Warrant Issuances

On January 26, 2022, the Company issued Common Stock Purchase Warrant “A-10” for rare earth capture advisory. The warrant provides the option to purchase 10,000 Class A Common Shares at a price of $2.05. The warrants expire on January 26, 2024.

On February 2, 2022, the Company issued Common Stock Purchase Warrant “C-37” in conjunction with the issuance of $600,000 convertible note. The warrant provides the option to purchase 60,000 Class A Common Shares at a price of $1.50. The warrants expire on February 2, 2023.

On February 7, 2022, the Company issued Common Stock Purchase Warrant “A-11” for rare earth processing advisory. The warrant provides the option to purchase 50,000 Class A Common Shares at a price of $4.25. The warrants expire on February 7, 2026.

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

	March 31, 2023			March 31, 2022
Expected Dividend Yield		0	%		0	%
Expected volatility		87.97	%		123-617	%
Risk-free rate		2.37	%		1.40-1.62	%
Expected life of warrants	.22-8.75 years			1.635-5.588 years

Company Warrants:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Exercisable (Vested) – December 31, 2021		8,401,221	$	1.135		2.152	$	7,453,214
Granted		60,000	$	3.883		4.521	$	18,000
Forfeited or Expired		-	$	-		-	$	-
Exercised		1,681,022	$	1.215		3.094	$	5,321,781
Outstanding - March 31, 2022		6,780,199	$	1.139		1.635	$	18,277,625
Exercisable (Vested) - March 31, 2022		6,780,199	$	1.139		1.635	$	18,277,625
Exercisable (Vested) – December 31, 2022		9,724,369	$	2.75		1.69	$	6,515,327
Granted		-	$	-		-	$	121,018
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2022		9,724,369	$	2.75		1.45	$	9,724,369
Exercisable (Vested) - March 31, 2022		9,724,369	$	2.75		1.45	$	9,724,369

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Company Options:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding – December 31, 2021		2,159,269	$	1.606		5.660	$	1,919,129
Exercisable (Vested) – December 31, 2021		888,659	$	1.581		5.047	$	749,470
Granted		75,000	$	2.560		6.847	$	105,000
Forfeited or Expired		50,000	$	1.050		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2022		2,184,269	$	1.651		5.588	$	5,010,909
Exercisable (Vested) - March 31, 2022		938,659	$	1.739		5.260	$	2,149,710
Outstanding – December 31, 2022		5,834,268	$	1.665		5.39	$	3,186,870
Exercisable (Vested) – December 31, 2022		3,159,268	$	1.517		4.91	$	3,141,183
Granted		-	$	-		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2023		5,834,268	$	1.665		5.14	$	5,484,212
Exercisable (Vested) - March 31, 2023		3,159,268	$	1.517		4.67	$	2,906,527

NOTE 7 - 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 $1,157,580, the Company has accrued $1,432,077 as a payable to the Commonwealth of Kentucky including amounts owed to the Kentucky Energy Cabinet. Claims assessed by the Mine Health Safety Administration amount to $856,498 of which the Company has accrued $351,303 as a payable. During 2019, McCoy and Deane, received notice of intent to place liens for amounts owed on federal excise taxes. The amounts associated with the notices are included in the company’s trade payables.

Our principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038. We pay $5,726 per month in rent for the office space and the rental lease expires December 2026. On January 1, 2022, the Company entered into an expansion lease for the site. The amended lease has a ten year term and $5,869 per month rate.

We also rent office space from an affiliated entity, LRR, at 11000 Highway 7 South, Kite, Kentucky 41828 and pay $1,702 per month rent and the rental lease expires January 1, 2030.

On October 8, 2022, ReElement entered into a Commercial Lease for 6,700 square feet of warehouse space for the purpose of building a commercial grade critical element purification facility. The is for the period of 2 years with a rate of $4,745.83 a month.

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.

NOTE 8 - SUBSEQUENT EVENTS

None.

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

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

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

Overview

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

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

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

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

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

McCoy Elkhorn Coal LLC

General:

Located primarily within Pike County, Kentucky, McCoy Elkhorn is currently comprised of three mines (Mine #15) in “idle” status, and two mines in operations (Carnegie 1 and 2 Mines), two coal preparation facilities (Bevins #1 and Bevins #2), and other mines in various stages of development or reclamation. McCoy Elkhorn sells its coal to a variety of customers, both domestically and internationally, primarily to the steel making industry as a high-vol “B” coal or blended coal. The coal controlled at McCoy Elkhorn (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Items 1300 through 1305 of Regulation S-K, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Items 1300 through 1305 of Regulation S-K.

Mines:

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

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

The Carnegie 2 Mine is an underground mine in the Alma and Upper Alma coal seams and located near Kimper, Kentucky. In 2021, mine development began and operations at the Carnegie 2 Mine started in August 2022 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 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 Carnegie 2. Mine has the estimated capacity to produce up to approximately 10,000 tons per month of coal.

The mineral being mined through Carnegie 1 and Carnegie 2 is leased from a 3^rd party professional mineral company.  Coal mined from the lease requires a payment of greater of $1.75 per ton or 6% of gross sales price. 

Beginning in January 2020, Mine #15 and Carnegie 1 mines were idled due to the adverse market effects Covid-19 global pandemic. The Carnegie 1 mine restarted during October 2022 and the Carnegie 2 mine commenced during 2022.   

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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.

Knott County Coal LLC

General:

Located primarily within Knott County, Kentucky (but with additional idled permits in Leslie County, Perry County, and Breathitt County, Kentucky), Knott County Coal is comprised of 22 idled mining permits (or permits in reclamation) and permits for one preparation facility: the idled Supreme Energy Preparation Plant. The idled mining permits are either in various stages of reclamation or being maintained as idled, pending any changes to the coal market that may warrant reinitiating production. The idled mines at Knott County Coal are primarily underground mines that utilize room-and-pillar mining. The coal controlled at Deane Mining (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Items 1300 through 1305 of Regulation S-K, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Items 1300 through 1305 of Regulation S-K.

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Mines:

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

Processing & Transportation:

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

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

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

Additional Permits:

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

Deane Mining LLC

General:

Located within Letcher County and Knott County, Kentucky, Deane Mining is comprised of one idled underground coal mine (the Access Energy Mine), one idled surface mine (Razorblade Surface) and one idled coal preparation facility called Mill Creek Preparation Plant, along with 12 additional idled mining permits (or permits in reclamation). The idled mining permits are either in various stages of development, reclamation or being maintained as idled, pending any changes to the coal market that may warrant re-starting production. The coal controlled at Deane Mining (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Items 1300 through 1305 of Regulation S-K, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Items 1300 through 1305 of Regulation S-K.

Mines:

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

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

Processing & Transportation:

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

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

Additional Permits:

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

Wyoming County Coal LLC

General:

Located within Wyoming County, West Virginia, Wyoming County Coal is comprised of two idled underground mining permits and the three permits associated with the idled Pioneer Preparation Plant, the Hatcher rail loadout, and Simmons Fork Refuse Impoundment. The two idled mining permits are undisturbed underground mines that are anticipated to utilize room-and-pillar mining. The coal controlled at Wyoming County Coal (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Items 1300 through 1305 of Regulation S-K, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Items 1300 through 1305 of Regulation S-K.

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 was paid in cash.

Permits:

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

Perry County Resources LLC

General:

Located primarily within Perry County, Kentucky, Perry County Resources LLC is comprised of one “Idled” underground mine (the E4-2 mine) and one “Idled” 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 Items 1300 through 1305 of Regulation S-K, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Items 1300 through 1305 of Regulation S-K.

21

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.

Beginning in January 2020, The E4-2 mine was idled due to the adverse market effects Covid-19 global pandemic. The E4-2 Mine was restarted during March 2022 and idled due to regional flooding during October 2022.  

Processing and Transportation:

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

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

Additional Permits:

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

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

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Mineral and Surface Leases

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

Coal Sales

ARC sells its coal to domestic and international customers, some which blend ARC’s coal at east coast ports with other qualities of coal for export. Coal sales currently come from the Company’s Carnegie 1 and 2 mines. The Company may, at times, purchase coal from other regional producers to sell on its contracts.

Competition

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

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Legal Proceedings

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

Please see financial statement note 6 for detail on cases.

Environmental, Governmental, and Other Regulatory Matters

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

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

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

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

24

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

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

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

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

Property

Our principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038. We pay $5,726 per month in rent for the office space and the rental lease expires December 2026. On January 1, 2022, the Company entered into an expansion lease for the site. The amended lease has a ten year term and $5,869 per month rate.

We also rent office space from an affiliated entity, LRR, at 11000 Highway 7 South, Kite, Kentucky 41828 and pay $1,702 per month rent and the rental lease expires January 1, 2030.

On August 17, 2022, American Rare Earth entered into a Commercial Land Lease sublease agreement with Land Betterment for nearly 7 acres of land for the purpose of building a commercial grade critical element purification facility. The sublease is for the period of 5 years with a rate of $3,500 a month.

On October 8, 2022, American Rare Earth entered into a Commercial Lease for 6,700 square feet of warehouse space for the purpose of building a commercial grade critical element purification facility. The is for the period of 2 years with a rate of $4,745.83 a month.

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

Employees

ARC, through its operating subsidiaries, employs a combination of company employees and contract labor to mine coal, process coal, and related functions. The Company is continually evaluating the use of company employees and contract labor to determine the optimal mix of each, given the needs of the Company. Currently, McCoy Elkhorn’s Carnegie 1 and 2 Mines and Perry’s E4-1 mine and are primarily run by contract labor, and the Company’s various coal preparation facilities are run by contract labor.

The Company currently has approximately 18 direct employees. The Company is headquartered in Fishers, Indiana with four members of the Company’s executive team based at this location.

25

Results of Operations

Our consolidated operations had operating revenues of $8,868,456 for the three-months ended March 31, 2023 and $9,080,622 operating revenue for the three-months ended March 31, 2022. We have incurred net loss attributable to American Resources shareholders in the amount of $3,100,869 and a net loss of $2,752,902 respectively for the same periods.

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

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

For the three months ended March 31, 2023 and 2022, coal sales and processing expenses were $2,705,820 and $2,890,858 respectively, development costs, including loss on settlement of ARO were $5,633,908 and $6,784,188, respectively, and production taxes and royalties $981,636 and $819,477 , respectively. Depreciation expense for the three months ended March 31, 2022 and 2022 were $13,336 and $626,042 respectively.

Liquidity and Capital Resources

As of March 31, 2023, and 2022, our available cash was $2,420,461 and $5,217,204 . We expect to fund our liquidity requirements with cash on hand, future borrowings and cash flow from operations. If future cash flows are insufficient to meet our liquidity needs or capital requirements, we may reduce our mine development and/or fund a portion of our expenditures through issuance of debt or equity securities, the entry into debt arrangements for from other sources, such as asset sales. We do not have any credit lines currently available to fund our liquidity requirements, and currently there is uncertainty regarding our ability to execute on the above strategy.

For the three months ending March 31, 2023 our net cash flow used in operating activities was $7,342,964 and for the period ending March 31, 2022 the net cash flow used in operating activities was $5,733,607.

For the three months ending March 31, 2022 and 2022 net cash provided by (used in) investing activities were $967,343 and $(792,025) respectively.

For the three months ending March 31, 2023 and 2022 net cash proceeds (used in) from financing activities were $(2,194,747) and $241,316 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.

26

Business Effect of Covid-19.

During 2022 and 2020, the worldwide COVID-19 outbreak has resulted in muted demand for infrastructure and steel products and their necessary inputs including Metallurgical coal. These recent developments are expected to result in lower sales and gross margins. Because of the adverse market conditions caused by the global pandemic the Company’s operations were idled in January 2020 and resumed during December 2020. Additionally, supply chain constraints are persistent in all parts of our business.

Off Balance Sheet Arrangements

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

Critical Accounting Policies

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

Recent Accounting Pronouncements

None.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

27

Item 4. Controls and Procedures

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

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

With respect to the period ending March 31, 2023, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.

Based upon our evaluation regarding the period ending March 31, 2023, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s insufficient number of staff performing accounting and reporting functions and lack of timely reconciliations. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.

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

(b) Changes in Internal Controls.

There have been no changes in the Company’s internal control over financial reporting during the period ended March 31, 2023 that have materially affected the Company’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Please see financial statement note 6 for detail on cases.

Item 1A. Risk Factors

Not applicable.

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

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

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

Item 5. Other Information

None.

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Item 6. Exhibits

The following exhibits are filed herewith except as otherwise noted:

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

30

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

101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

31

SIGNATURES

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

	AMERICAN RESOURCES CORPORATION
Date: May 15, 2023	By:	/s/ Mark C. Jensen
	Name:	Mark C. Jensen
	Title:	CEO, Chairman of the Board
		(Principal Executive Officer)

32

EX-21.1

EXHIBIT 21.1

Entity Name	Domestic Jurisdiction
American Carbon Corp	Indiana
Deane Mining, LLC	Delaware
Quest Processing LLC	Indiana
ERC Mining Indiana Corp	Indiana
McCoy Elkhorn Coal LLC d/b/a McCoy Elkhorn Coal	Indiana
Knott County Coal LLC	Indiana
Wyoming County Coal LLC	Indiana
Perry County Resources LLC	Indiana
ReElement Technologies LLC	Indiana
American Metals LLC	Indiana
Advanced Carbon Materials LLC	Indiana
American Opportunity Ventures, LLC	Delaware
American Opportunity Ventures II, LLC	Delaware
Novusterra Inc	Florida

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.

	AMERICAN RESOURCES CORPORATION
Date: May 15, 2023	By:	/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.

	AMERICAN RESOURCES CORPORATION
Date: May 15, 2023	By:	/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 March 31, 2023 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
Date: May 15, 2023	By:	/s/ Mark C. Jensen
		Mark C. Jensen,
		Chief Executive Officer
		Principal Executive Officer

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 March 31, 2023 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
Date: May 15, 2023	By:	/s/ Kirk P. Taylor
		Kirk P. Taylor,
		Chief Financial Officer
		Principal Financial Officer
		Principal Accounting Officer

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 three months ended March 31, 2023. 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		0		0		0		0		0	$	441.2
McCoy Elkhorn Carnegie Mine / 15-19313		4		0		0		0		0	$	17.6
McCoy Elkhorn Carnegie 2 Mine / 15-19801		3		0		0		0		0	$	6.9
McCoy Elkhorn Bevins Branch Preparation Plant / 15-10445		12		0		0		0		0	$	22.9
Deane Mining Access Mine/ 15-19532		0		0		0		0		0	$	95.0
Deane Mining Mill Creek Preparation Plant / 15-16577		0		0		0		0		0	$	0
Deane Mining Razorblade / 15-19829		0		0		0		0		0	$	0
Perry County Resources/E4-2 15-19015		6		0		0		0		0	$	103.5
Perry County Resources/Davidson Preparation Facility 15-05485		0		0		0		0		0	$	24.8
Knott County Coal Wayland/15-19402		0		0		0		0		0	$	0

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 Carnegie 2 Mine / 15-19801		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 Resources/E4-2 15-19015		0	No		0		0		0
Perry County Resources/Davidson Preparation Facility 15-05485		0	No		0		0		0
Knott County Coal Wayland / 15-19402		0	No		0		0		0

2

The number of legal actions pending before the Federal Mine Safety and Health Review Commission as of March 31, 2023 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		0		0		0		0		0		0
McCoy Elkhorn Carnegie Mine / 15-19313		0		0		0		0		0		0
McCoy Elkhorn Bevins Branch Preparation Plant / 15-10445		0		0		0		0		0		0
McCoy Elkhorn Carnegie 2 Mine / 15-19801		0		0		0		0		0		0
Deane Mining Access Mine / 15-19532		0		0		0		0		0		0
Deane Mining Mill Creek Preparation Plant / 15-16577		0		0		0		0		0		0
Deane Mining Razorblade / 15-19829		0		0		0		0		0		0
Perry County Resources/E4-2 15-19015		0		0		0		0		0		0
Perry County Resources/Davidson Preparation Facility 15-05485		0		0		0		0		0		0
Knott County Coal Wayland / 15-19402		0		0		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 three months ended March 31, 2023 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.

3

XML

Cover - shares	3 Months Ended
	Mar. 31, 2023	May 15, 2023
Cover [Abstract]
Entity Registrant Name	American Resources Corporation
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	false
Entity Current Reporting Status	Yes
Document Period End Date	Mar. 31, 2023
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding		78,213,454
Entity File Number	000-55456
Entity Incorporation State Country Code	FL
Entity Tax Identification Number	46-3914127
Entity Interactive Data Current	Yes
Entity Address Address Line 1	12115 Visionary Way
Entity Address City Or Town	Fishers
Entity Address State Or Province	IN
Entity Address Postal Zip Code	46038
City Area Code	317
Local Phone Number	855-9926
Trading Symbol	AREC
Security Exchange Name	NASDAQ
Document Quarterly Report	true
Document Transition Report	false
Security 12b Title	Class A Common

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2023	Dec. 31, 2022
CURRENT ASSETS
Cash	$ 297,245	$ 8,868,566
Accounts Receivable	1,694,929	660,755
Inventory	2,959,511	446,690
Prepaid fees	797,076	786,576
Total Current Assets	5,748,761	10,762,587
OTHER ASSETS
Cash - restricted	2,123,216	2,122,263
Property and equipment, net	9,303,457	9,113,722
Long-term right of use assets, net	12,913,548	13,033,889
Investment in LLC - Related Party	19,308,593	20,784,866
Note Receivable	99,022	99,022
Total Other Assets	43,747,836	45,153,762
TOTAL ASSETS	49,496,597	55,916,349
CURRENT LIABILITIES
Trade payable	4,305,293	4,916,243
Non-Trade Payables	2,685,008	2,524,243
Accounts payable - related party	3,005,044	4,295,232
Accrued interest	110,705	106,886
Current portion of long term-debt	839,730	1,917,506
Convertible note payables	0	9,787,423
Current portion of lease liabilities, net	3,962,155	3,889,235
Total Current Liabilities	21,843,507	27,436,768
Remediation liability	20,543,925	20,295,634
Lease liabilities, net	6,696,914	7,899,251
Total Other Liabilities	27,240,839	28,194,885
Total Liabilities	42,148,774	55,631,653
STOCKHOLDERS' DEFICIT
Common stock: $.0001 par value; 230,000,000 shares authorized, 76,197,850 and 66,777,620 shares issued and outstanding	7,622	6,680
Additional paid-in capital	177,680,313	167,517,259
Accumulated deficit	(170,340,112)	(167,239,243)
Total Stockholders' Equity (Deficit)	7,347,823	284,696
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 49,496,597	$ 55,916,349

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
CONDENSED CONSOLIDATED BALANCE SHEETS
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized	230,000,000	230,000,000
Common Stock, Shares Issued	76,197,850	66,777,620
Common Stock, Shares Outstanding	76,197,850	66,777,620

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Coal Sales	$ 8,723,185	$ 9,031,259
Metal recovery and sales	20,609	37,226
Royalty Income	124,662	12,137
Total Revenue	8,868,456	9,080,622
Cost of Coal Sales and Processing	(2,705,820)	(2,890,858)
Accretion Expense	(248,291)	(267,622)
Depreciation	(13,336)	(626,042)
Amortization of Mining Rights	(305,859)	(303,394)
General and Administrative	(1,321,468)	(1,020,814)
Professional Fees	(293,255)	(350,938)
Production Taxes and Royalties	(981,636)	(819,477)
Development Costs	(5,633,908)	(6,784,188)
Total Operating expenses	(11,503,573)	(13,063,333)
Net Loss from Operations	(2,635,117)	(3,983,711)
Other Income and (expense)
Other Income	93,000	82,156
Gain on cancelation of debt	0	1,521,304
Amortization of debt discount and debt issuance costs	0	0
Interest Income	17,212	10,045
Interest expense	(575,964)	(383,696)
Total Other income (expense)	(465,752)	1,229,809
Net Loss	$ (3,100,869)	(2,752,902)
Less: Net Loss attributable to Non controlling interest		(7,884)
Net loss attributable to American Resources Corp. Shareholders		$ (2,745,018)
Net loss per common share - basic and diluted	$ (0.04)	$ (0.04)
Weighted average common shares outstanding- basic and diluted	72,953,104	65,253,533

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT) (Unaudited) - USD ($)	Total	Common Stock	APIC	Accumulated Deficit	Non Controlling Interest
Balance, amount at Dec. 31, 2021	$ 0	$ 0	$ 0	$ 0	$ 0
Balance, shares at Dec. 31, 2021		0
Shares issued in connection with warrant conversions, shares		187,250
Shares issued in connection with warrant conversions, amount	280,875	$ 19	280,856
Amortization of beneficial conversion features	(40,655)		(40,655)
Shares issued in connection with debt conversions, shares		884,229
Shares issued in connection with debt conversions, amount	1,006,726	$ 89	1,006,637
Amortization of Warrant and Option Expense	199,843		199,843
Net Loss	(2,752,902)			(2,745,018)	(7,884)
Balance, shares at Mar. 31, 2022		66,156,471
Balance, amount at Mar. 31, 2022	(3,651,521)	$ 6,616	164,888,336	(168,538,589)	(7,884)
Balance, amount at Dec. 31, 2022	$ 0	$ 0	$ 0	0	$ 0
Balance, shares at Dec. 31, 2022		0
Shares issued in connection with warrant conversions, shares	9,787,423	942	9,786,481
Shares issued in connection with warrant conversions, amount		$ 9,420,230
Net Loss	$ (3,100,869)			(3,100,869)
Amortization of Warrant and Stock Option Expense	376,573		$ 376,573
Balance, shares at Mar. 31, 2023		76,197,850
Balance, amount at Mar. 31, 2023	$ 10,448,692	$ 7,622	$ 177,680,313	$ (170,340,112)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash Flows from Operating activities:
Net loss	$ (3,100,869)	$ (2,752,902)
Gain on forgiveness of debt	0	(1,521,304)
Depreciation	13,336	626,042
Amortization of mining rights	305,859	303,394
Accretion expense	248,291	267,622
Accretion of right of use assets	107,895	2,899
Warrant expense	376,573	199,843
Issuance of common share options for compensation	0	0
Amortization of beneficial conversion feature	0	0
Issuance of common shares for services	0	0
Change in current assets and liabilities:
Accounts receivable	(1,034,174)	319,312
Prepaid expenses and other assets	(10,500)	(951,410)
Inventory	(2,512,821)	(1,236,065)
Accounts payable	(450,185)	(393,866)
Accounts payable related party	(1,290,188)	(691,607)
Accrued interest	3,819	94,435
Cash provided by (used in) operating activities	(7,342,964)	(5,733,607)
Cash Flows from Investing activities:
Cash paid for PPE, net	(508,930)	(724,900)
Capitalized interest	0	267,875
Cash invested in notes receivable	0	(335,000)
Investment in LLC	1,476,273	0
Cash provided by (used in) investing activities	967,343	(792,025)
Cash Flows from Financing activities:
Principal payments on long term debt	(1,077,778)	(39,559)
Principal payments on finance lease	(1,116,969)	0
Proceeds from convertible note	0	0
Proceeds from warrant conversions	0	280,875
Proceeds from sale of common stock, net	0	0
Cash provided by financing activities	(2,194,747)	241,316
Increase (decrease) in cash and restricted cash	(8,570,638)	(6,284,316)
Cash and restricted cash, beginning of period	10,990,829	12,588,113
Cash and restricted cash, end of period	2,420,461	$ 6,303,797
Supplemental Information
Conversion of debt to common shares		1,006,726
Discount on note due to beneficial conversion feature	0	$ 0
Cash paid for interest	$ 64,094	$ 3,726

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2023

Common Shares Class A [Member]

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Presentation and Consolidation:

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

Entities for which ownership is less than 100% a determination is made whether there is a requirement to apply the variable interest entity (VIE) model to the entity. Where the company holds current or potential rights that give it the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, combined with a variable interest that gives the Company the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company would be deemed to have a controlling interest.

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

Interim Financial Information

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. In the opinion of management, these interim unaudited Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any other period. These financial statements should be read in conjunction with the Company’s 2022 audited financial statements and notes thereto which were filed on form 10-K on March 31, 2023.

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

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

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

Cash, Cash Equivalents and Restricted cash:  

The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that agrees to the total of those amounts as presented in the consolidated statement of cash flows for the three months ended March 31, 2023 and March 31, 2022:

	March 31, 2023		March 31, 2022
Cash	$	297,245	$	5,217,204
Restricted Cash		2,123,216		1,086,593
Total cash and restricted cash presented in the consolidated statement of cash flows	$	2,420,461	$	6,303,797

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

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

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

The table below reflects the changes to our ARO:

Balance at December 31, 2022	$	18,951,587
Accretion – 3 months March 31, 2023		1,344,047
Reclamation work – 3 months March 31, 2023		-
Balance at March 31, 2023	$	20,295,634
Balance at December 31, 2021	$	18,951,587
Accretion – 3 months March 31, 2022		267,622
Reclamation work – 3 months March 31, 2022		-
Balance at March 31, 2022	$	19,219,209

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

Allowance for trade receivables as of March 31, 2023 and December 31, 2022 amounted to $0, for both periods. Allowance for other accounts receivables as of March 31, 2023 and December 31, 2022 amounted to $1,888,070 and $1,744,570, respectively.

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of March 31, 2023 and December 31, 2022.

Prepaid Fees and Advance Royalties: Coal leases that require minimum annual or advance payments and are recoverable from future production are generally deferred and charged to expense as the coal is subsequently produced.

Inventory: Inventory consisting of mined coal is stated at the lower of cost (first in, first out method) or net realizable value.

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

XML

PROPERTY AND EQUIPMENT

3 Months Ended

Mar. 31, 2023

PROPERTY AND EQUIPMENT

NOTE 2 - PROPERTY AND EQUIPMENT

NOTE 2 - PROPERTY AND EQUIPMENT

At March 31, 2023 and December 31, 2022, property and equipment were comprised of the following:

	March 31, 2023			December 31, 2022
Processing and rail facility	$	508,930		$	-
Underground equipment		-			-
Surface equipment		-			-
Coal refuse storage		12,134,192			12,134,192
Mine Development		561,575			561,575
Land		1,617,435			1,572,435
Less: Accumulated depreciation		(319,195	)		(5,199,478	)
Total Property and Equipment, Net	$	9,303,459		$	9,113,724

Depreciation expense amounted to $319,195 and $393,530 for the period March 31, 2023 and March 31, 2022, respectively.

The estimated useful lives are as follows:

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

XML

NOTES PAYABLE

3 Months Ended

Mar. 31, 2023

NOTES PAYABLE

NOTE 4 - NOTES PAYABLE

NOTE 3 - NOTES PAYABLE

During the three-month period ended March 31, 2023, principal reductions on long term debt totaled $1,077,776, primarily due to payments of the Integrity loan. During the three-month period ended March 31, 2023, increases to long term debt totaled $0. On January 31, 2023, the remaining amounts of the convertible notes in the amount of $9,891,241 was converted into 9,420,230 common shares of the Company.  Extinguishing all future liabilities under the convertible note.

During the three-month period ended March 31, 2022, principal reductions on long term debt totaled $1,564,684, primarily due to debt forgiveness of PPP loan. During the three-month period ended March 31, 2022, increases to long term debt totaled $0. The notes have a minimum offering amount of $12,500,000 and maximum of $25,000,000 and minimum investment of $500,000. The notes carry a 24-month term, 12.5% interest 10% warrant coverage and a conversion price of $1.05. The warrants have an exercise price of $1.50. 

XML

RIGHT OF USE ASSETS AND LEASES

3 Months Ended

Mar. 31, 2023

RIGHT OF USE ASSETS AND LEASES

NOTE 3 - RIGHT OF USE ASSETS

NOTE 4 – RIGHT OF USE ASSETS AND LEASES

The right-of-use asset is the Company’s right to use an asset over the life of a lease. The asset is calculated as the initial amount of the lease liability, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received.

The Company’s discounted lease payment rate is 10.82%. 

Our principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038. We pay $5,726 per month in rent for the office space and the rental lease expires December 2026. On January 1, 2023, the Company entered into an expansion lease for the site. The amended lease has a ten-year term and $5,869 per month rate.

We also rent office space from an affiliated entity, LRR, at 11000 Highway 7 South, Kite, Kentucky 41828 and pay $1,702 per month rent and the rental lease expires January 1, 2030.

On August 17, 2022, ReElement entered into a Commercial Land Lease sublease agreement with Land Betterment for nearly 7 acres of land for the purpose of building a commercial grade critical element purification facility. The sublease is for the period of 5 years with a rate of $3,500 a month.

On October 8, 2022, ReElement entered into a Commercial Lease for 6,700 square feet of warehouse space for the purpose of building a commercial grade critical element purification facility. The is for the period of 2 years with a rate of $4,745.83 a month.

At March 31, 2023, right of use assets and liabilities were comprised of the following:

	March 31, 2023				March 31, 2022
	Asset		Liability		Asset		Liability
Operating Leases		613,094		617,892		704,627		776,424
Finance Leases		12,300,454		10,236,296		-		-

XML

RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2023

RELATED PARTY TRANSACTIONS

NOTE 5 - RELATED PARTY TRANSACTIONS

NOTE 5 - RELATED PARTY TRANSACTIONS

Land Resources & Royalties

The Company leases property from Land Resources & Royalties (LRR), an entity controlled by certain members of the Company’s management who are also directors and shareholders. Until July 1, 2018, LRR was consolidated as a VIE resulting in transaction between the two companies to be eliminated upon consolidation. Upon deconsolidation, amounts paid and owed to LRR have been disclosed discreetly in the consolidated financial statements. For the three-month period ending March 31, 2023, royalty expense incurred with LRR amounted to $100,610.  As of March 31, 2023, total amounts owed LRR amounted to $192,742. For the three-month period ending March 31, 2022, royalty expense incurred with LRR amounted to $57,135. As of March 31, 2022, total amounts owed LRR amounted to $0.

Land Betterment Corp

On February 13, 2022, the Company entered into a Contract Services Agreement with Land Betterment Corporation, an entity controlled by certain members of the Company’s management who are also directors and shareholders. The contract terms state that service costs are passed through to the Company with a 12.5% mark-up and a 50% share of cost savings which includes payroll covering aforementioned members of the Company’s management. The services agreement covers all of the Company’s properties. For the 3 months ended March 31, 2023 amounts incurred under the agreement amounted to $959,018 and amounts paid totaled $2,403,040. As of March 31, 2023, amounts payable under the agreement amounted to $3,244,901. For the 3 months ended March 31, 2022 amounts incurred under the agreement amounted to $1,574,015 and amounts paid totaled $839,280. As of March 31, 2022, amounts payable under the agreement amounted to $2,793,658. For the 3 months ended March 31, 2023 and 2022, service charges covering members of the Company’s management amounted to $0, respectively.

American Opportunity Venture, LLC

During January 2022, the company invested $2,250,000 for 50% ownership and become the managing member of American Opportunity Venture, LLC. (AOV) It has been determined that AOV is a variable interest entity and that the Company is not primary beneficiary. As such, the investment in AOV will be accounted for using the equity method of accounting.

American Opportunity Venture II, LLC

During March 2022, the Company invested $25,000 for 100% ownership and become the managing member of American Opportunity Venture II, LLC. (AOVII). As such, the investment in AOVII has been eliminated in the accompanying financial statements. As of March 31, 2022, AOVII has had no operational activity.

Novusterra, Inc.

During March 2021, the Company licensed certain technology to an unrelated entity, Novusterra, Inc. According to the commercial terms of the license, the Company is to receive 50% of future cash flows and 15,750,000 common shares of Novusterra, Inc. During August 22, 2022, the Company sold the licensed patents to Novusterra, Inc. All prior licensing obligations were voided upon the sale.  It has been determined that Novusterra is a variable interest entity and that the Company is not the primary beneficiary. As such, the investment in Novusterra will be accounted for using the equity method of accounting. . As of March 31, 2023, Novusterra has had no operational activity.

Land Betterment Exchange (LBX)

The Company is the holder of 2,000,000 LBX Tokens with a par value of $250 for each token. The token issuance process is undertaken by a related party, Land Betterment, and is predicated on proactive environmental stewardship and regulatory bond releases. As of March 31, 2023, there is no market for the LBX Token and therefore no value has been assigned.

FUB Mineral LLC

On October 1, 2022, the Company invested $250,000 into FUB Mineral, LLC a company with common owners. 

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EQUITY TRANSACTIONS

3 Months Ended

Mar. 31, 2023

EQUITY TRANSACTIONS

NOTE 8 - EQUITY TRANSACTIONS

NOTE 6 – EQUITY TRANSACTIONS

Employee stock compensation expense for the three-month period ending March 31, 2023 and 2022 amounted to $376,573 and $199,843 respectively.

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

On March 31, 2022, the Company issued 884,229 class A common shares pursuant to the conversion of $1,006,726 of accrued interest.

Warrant Exercises

On January 13, 2022, the Company issued 117,250 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $1.50.

On March 30, 2022, the Company issued 47,500 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $1.50.

On March 31, 2022, the Company issued 22,500 shares of Class A Common Stock based upon a cash pay warrant exercise. The share price at issuance was $1.50.

New Warrant Issuances

On January 26, 2022, the Company issued Common Stock Purchase Warrant “A-10” for rare earth capture advisory. The warrant provides the option to purchase 10,000 Class A Common Shares at a price of $2.05. The warrants expire on January 26, 2024.

On February 2, 2022, the Company issued Common Stock Purchase Warrant “C-37” in conjunction with the issuance of $600,000 convertible note. The warrant provides the option to purchase 60,000 Class A Common Shares at a price of $1.50. The warrants expire on February 2, 2023.

On February 7, 2022, the Company issued Common Stock Purchase Warrant “A-11” for rare earth processing advisory. The warrant provides the option to purchase 50,000 Class A Common Shares at a price of $4.25. The warrants expire on February 7, 2026.

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

	March 31, 2023			March 31, 2022
Expected Dividend Yield		0	%		0	%
Expected volatility		87.97	%		123-617	%
Risk-free rate		2.37	%		1.40-1.62	%
Expected life of warrants	.22-8.75 years			1.635-5.588 years

Company Warrants:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Exercisable (Vested) – December 31, 2021		8,401,221	$	1.135		2.152	$	7,453,214
Granted		60,000	$	3.883		4.521	$	18,000
Forfeited or Expired		-	$	-		-	$	-
Exercised		1,681,022	$	1.215		3.094	$	5,321,781
Outstanding - March 31, 2022		6,780,199	$	1.139		1.635	$	18,277,625
Exercisable (Vested) - March 31, 2022		6,780,199	$	1.139		1.635	$	18,277,625
Exercisable (Vested) – December 31, 2022		9,724,369	$	2.75		1.69	$	6,515,327
Granted		-	$	-		-	$	121,018
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2022		9,724,369	$	2.75		1.45	$	9,724,369
Exercisable (Vested) - March 31, 2022		9,724,369	$	2.75		1.45	$	9,724,369

Company Options:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding – December 31, 2021		2,159,269	$	1.606		5.660	$	1,919,129
Exercisable (Vested) – December 31, 2021		888,659	$	1.581		5.047	$	749,470
Granted		75,000	$	2.560		6.847	$	105,000
Forfeited or Expired		50,000	$	1.050		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2022		2,184,269	$	1.651		5.588	$	5,010,909
Exercisable (Vested) - March 31, 2022		938,659	$	1.739		5.260	$	2,149,710
Outstanding – December 31, 2022		5,834,268	$	1.665		5.39	$	3,186,870
Exercisable (Vested) – December 31, 2022		3,159,268	$	1.517		4.91	$	3,141,183
Granted		-	$	-		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2023		5,834,268	$	1.665		5.14	$	5,484,212
Exercisable (Vested) - March 31, 2023		3,159,268	$	1.517		4.67	$	2,906,527

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CONTINGENCIES

3 Months Ended

Mar. 31, 2023

CONTINGENCIES

CONTINGENCIES

NOTE 7 - 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 $1,157,580, the Company has accrued $1,432,077 as a payable to the Commonwealth of Kentucky including amounts owed to the Kentucky Energy Cabinet. Claims assessed by the Mine Health Safety Administration amount to $856,498 of which the Company has accrued $351,303 as a payable. During 2019, McCoy and Deane, received notice of intent to place liens for amounts owed on federal excise taxes. The amounts associated with the notices are included in the company’s trade payables.

Our principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038. We pay $5,726 per month in rent for the office space and the rental lease expires December 2026. On January 1, 2022, the Company entered into an expansion lease for the site. The amended lease has a ten year term and $5,869 per month rate.

We also rent office space from an affiliated entity, LRR, at 11000 Highway 7 South, Kite, Kentucky 41828 and pay $1,702 per month rent and the rental lease expires January 1, 2030.

On October 8, 2022, ReElement entered into a Commercial Lease for 6,700 square feet of warehouse space for the purpose of building a commercial grade critical element purification facility. The is for the period of 2 years with a rate of $4,745.83 a month.

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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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2023

SUBSEQUENT EVENTS

NOTE 10 - SUBSEQUENT EVENTS

NOTE 8 - SUBSEQUENT EVENTS

None.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2023

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 American Carbon Corp (ACC), Deane Mining, LLC (Deane), Quest Processing LLC (Quest Processing), ERC Mining Indiana Corp (ERC), McCoy Elkhorn Coal LLC (McCoy), Knott County Coal LLC (KCC), Wyoming County Coal (WCC),Perry County Resources LLC (PCR), ReElement Technologies, LLC (ReElement), and American Metals LLC (AM). All significant intercompany accounts and transactions have been eliminated.

Entities for which ownership is less than 100% a determination is made whether there is a requirement to apply the variable interest entity (VIE) model to the entity. Where the company holds current or potential rights that give it the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, combined with a variable interest that gives the Company the right to receive potentially significant benefits or the obligation to absorb potentially significant losses, the Company would be deemed to have a controlling interest.

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

Interim Financial Information

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. In the opinion of management, these interim unaudited Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any other period. These financial statements should be read in conjunction with the Company’s 2022 audited financial statements and notes thereto which were filed on form 10-K on March 31, 2023.

Convertible Preferred Securities

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

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

Cash

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.

Cash, Cash Equivalents and Restricted cash

The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that agrees to the total of those amounts as presented in the consolidated statement of cash flows for the three months ended March 31, 2023 and March 31, 2022:

	March 31, 2023		March 31, 2022
Cash	$	297,245	$	5,217,204
Restricted Cash		2,123,216		1,086,593
Total cash and restricted cash presented in the consolidated statement of cash flows	$	2,420,461	$	6,303,797

Asset Retirement Obligations (aro) - Reclamation

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

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

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

The table below reflects the changes to our ARO:

Balance at December 31, 2022	$	18,951,587
Accretion – 3 months March 31, 2023		1,344,047
Reclamation work – 3 months March 31, 2023		-
Balance at March 31, 2023	$	20,295,634
Balance at December 31, 2021	$	18,951,587
Accretion – 3 months March 31, 2022		267,622
Reclamation work – 3 months March 31, 2022		-
Balance at March 31, 2022	$	19,219,209

Allowance For Doubtful Accounts

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

Allowance for trade receivables as of March 31, 2023 and December 31, 2022 amounted to $0, for both periods. Allowance for other accounts receivables as of March 31, 2023 and December 31, 2022 amounted to $1,888,070 and $1,744,570, respectively.

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of March 31, 2023 and December 31, 2022.

Prepaid Fees and Advance Royalties

Prepaid Fees and Advance Royalties: Coal leases that require minimum annual or advance payments and are recoverable from future production are generally deferred and charged to expense as the coal is subsequently produced.

Inventory

Inventory: Inventory consisting of mined coal is stated at the lower of cost (first in, first out method) or net realizable value.

Reclassifications

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule Of Restricted Cash And Cash Equivalents

	March 31, 2023		March 31, 2022
Cash	$	297,245	$	5,217,204
Restricted Cash		2,123,216		1,086,593
Total cash and restricted cash presented in the consolidated statement of cash flows	$	2,420,461	$	6,303,797

Schedule Of Asset Retirement Obligations

Balance at December 31, 2022	$	18,951,587
Accretion – 3 months March 31, 2023		1,344,047
Reclamation work – 3 months March 31, 2023		-
Balance at March 31, 2023	$	20,295,634
Balance at December 31, 2021	$	18,951,587
Accretion – 3 months March 31, 2022		267,622
Reclamation work – 3 months March 31, 2022		-
Balance at March 31, 2022	$	19,219,209

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PROPERTY AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2023

PROPERTY AND EQUIPMENT

Schedule Of Property And Equipment

	March 31, 2023			December 31, 2022
Processing and rail facility	$	508,930		$	-
Underground equipment		-			-
Surface equipment		-			-
Coal refuse storage		12,134,192			12,134,192
Mine Development		561,575			561,575
Land		1,617,435			1,572,435
Less: Accumulated depreciation		(319,195	)		(5,199,478	)
Total Property and Equipment, Net	$	9,303,459		$	9,113,724

Depreciation expense amounted to $319,195 and $393,530 for the period March 31, 2023 and March 31, 2022, respectively.

The estimated useful lives are as follows:

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

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RIGHT OF USE ASSETS AND LEASES (Tables)

3 Months Ended

Mar. 31, 2023

RIGHT OF USE ASSETS AND LEASES

Schedule Of Right Of Use Assets And Liablities

	March 31, 2023				March 31, 2022
	Asset		Liability		Asset		Liability
Operating Leases		613,094		617,892		704,627		776,424
Finance Leases		12,300,454		10,236,296		-		-

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EQUITY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2023

EQUITY TRANSACTIONS

Schedule Of Black scholes option pricing model

	March 31, 2023			March 31, 2022
Expected Dividend Yield		0	%		0	%
Expected volatility		87.97	%		123-617	%
Risk-free rate		2.37	%		1.40-1.62	%
Expected life of warrants	.22-8.75 years			1.635-5.588 years

Schedule Of Warrants

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Exercisable (Vested) – December 31, 2021		8,401,221	$	1.135		2.152	$	7,453,214
Granted		60,000	$	3.883		4.521	$	18,000
Forfeited or Expired		-	$	-		-	$	-
Exercised		1,681,022	$	1.215		3.094	$	5,321,781
Outstanding - March 31, 2022		6,780,199	$	1.139		1.635	$	18,277,625
Exercisable (Vested) - March 31, 2022		6,780,199	$	1.139		1.635	$	18,277,625
Exercisable (Vested) – December 31, 2022		9,724,369	$	2.75		1.69	$	6,515,327
Granted		-	$	-		-	$	121,018
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2022		9,724,369	$	2.75		1.45	$	9,724,369
Exercisable (Vested) - March 31, 2022		9,724,369	$	2.75		1.45	$	9,724,369

Schedule Of Options

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding – December 31, 2021		2,159,269	$	1.606		5.660	$	1,919,129
Exercisable (Vested) – December 31, 2021		888,659	$	1.581		5.047	$	749,470
Granted		75,000	$	2.560		6.847	$	105,000
Forfeited or Expired		50,000	$	1.050		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2022		2,184,269	$	1.651		5.588	$	5,010,909
Exercisable (Vested) - March 31, 2022		938,659	$	1.739		5.260	$	2,149,710
Outstanding – December 31, 2022		5,834,268	$	1.665		5.39	$	3,186,870
Exercisable (Vested) – December 31, 2022		3,159,268	$	1.517		4.91	$	3,141,183
Granted		-	$	-		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - March 31, 2023		5,834,268	$	1.665		5.14	$	5,484,212
Exercisable (Vested) - March 31, 2023		3,159,268	$	1.517		4.67	$	2,906,527

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash	$ 297,245	$ 8,868,566	$ 5,217,204
Restricted Cash	2,123,216	2,122,263	1,086,593
Total cash and restricted cash presented in the consolidated statement of cash flows	$ 2,420,461	$ 10,990,829	$ 6,303,797	$ 12,588,113

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Beginning Balance	$ 18,951,587	$ 18,951,587
Accretion	1,344,047	267,622
Reclamation work	0	0
Ending Balance	$ 20,295,634	$ 19,219,209

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ownership Percent	100.00%
Discount Rate	10.00%
Allowance For Trade Receivables	$ 0	$ 0
Allowance For Other Accounts Receivables	$ 1,888,070	$ 1,744,570

XML

PROPERTY AND EQUIPMENT (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Less: Accumulated Depreciation	$ (319,195)	$ (5,199,478)
Total Property And Equipment, Net	9,303,459	9,113,724
Underground equipment [Member]
Property And Equipment	0	0
Surface equipment [Member]
Property And Equipment	0	0
Mine development [Member]
Property And Equipment	561,575	561,575
Processing and rail facilities [Member]
Property And Equipment	508,930	0
Coal refuse storage [Member]
Property And Equipment	12,134,192	12,134,192
Land [Member]
Property And Equipment	$ 1,617,435	$ 1,572,435

XML

PROPERTY AND EQUIPMENT (Details 1)	3 Months Ended
	Mar. 31, 2023
Coal refuse storage [Member]
Estimated Useful Lives	10 years
Processing and rail facilities [Member] | Minimum [Member]
Estimated Useful Lives	7 years
Processing and rail facilities [Member] | Maximum [Member]
Estimated Useful Lives	20 years
Underground equipment [Member]
Estimated Useful Lives	5 years
Surface equipment [Member]
Estimated Useful Lives	7 years
Mining Rights [Member] | Minimum [Member]
Estimated Useful Lives	5 years
Mining Rights [Member] | Maximum [Member]
Estimated Useful Lives	10 years

XML

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
PROPERTY AND EQUIPMENT
Depreciation Expense	$ 319,195	$ 393,530

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NOTES PAYABLE (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
NOTES PAYABLE
Principal reductions on long term debt	$ 1,077,776	$ 1,564,684
Increases to long term debt totaled	0	0
Convertible notes	$ 9,891,241
Conversion of notes into common stock	9,420,230
Minimum offering amount		$ 12,500,000
Notes Monthly term		24 months
Interest rate		12.50%
Warrant coverage percentage		10.00%
Conversion price		$ 1.05
Warrant excercise price		$ 1.50
Maximum offering amount		$ 25,000,000
Minimum investment		$ 500,000

XML

RIGHT OF USE ASSETS AND LEASES (Details) - USD ($)	Mar. 31, 2023	Mar. 31, 2022
RIGHT OF USE ASSETS AND LEASES
Operating Leases asset	$ 613,094	$ 704,627
Operating Leases liabilities	617,892	776,424
Finance Leases Asset	12,300,454	0
Finance Leases Liability	$ 10,236,296	$ 0

XML

RIGHT OF USE ASSETS AND LEASES (Details Narrative)			1 Months Ended	3 Months Ended
	Oct. 08, 2022 USD ($) ft²	Oct. 08, 2021 USD ($) ft²	Aug. 17, 2022 USD ($)	Mar. 31, 2023 USD ($)	Aug. 17, 2021 ft²
Rent for the office space	$ 4,745	$ 4,745		$ 5,726
Discounted lease payment rate				10.82%
Rental lease expired date				December 2026
Sublease			$ 3,500
Sublease term	2		5
Warehouse space | ft²	6,700	6,700
Commercial Land Lease sublease area | ft²					7
Amended Lease [Member]
Lease term				10 years
Rent for the office space				$ 5,869
LRR [Member]
Rent for the office space				$ 1,702
Rental lease expired date				January 1, 2030

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Royalty Expense	$ 981,636	$ 819,477
Land Betterment Exchange (LBX) [Member]
LBX token par value	$ 250
LBX token holding, Description	The Company is the holder of 2,000,000 LBX Tokens
Land Betterment Corporation [Member] | Contract Services Agreement [Member]
Terms Of Contract, Description	The contract terms state that service costs are passed through to the Company with a 12.5% mark-up and a 50% share of cost savings which includes payroll covering aforementioned members of the Company’s management
Amounts payable under the agreement	$ 959,018	1,574,015
Amounts incurred under the agreement	3,244,901	2,793,658
Amount Paid To Related Party	2,403,040	839,280
Service charges	0	0
LRR [Member]
Royalty Expense	100,610	57,135
Total Amount Owed From Related Party	192,742	$ 0
FUB Mineral LLC [Member] | October 1, 2021 [Member]
Invested amount	$ 250,000
January, 2021 [Member] | American Opportunity Venture, LLC [Member]
Ownership Percentage	50.00%
Invested amount	$ 2,250,000
March, 2021 [Member] | Novusterra, Inc [Member]
Ownership Percentage	50.00%
Common shares exchange for equity method investment	15,750,000
March, 2021 [Member] | American Opportunity Venture II, LLC [Member]
Ownership Percentage	100.00%
Invested amount	$ 25,000

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EQUITY TRANSACTIONS (Details)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Expected Dividend Yield	0.00%	0.00%
Risk-free rate	87.97%
Expected volatility	2.37%
Minimum [Member]
Risk-free rate		1.40%
Expected volatility		123.00%
Expected life of warrants	2 months 19 days	1 year 7 months 18 days
Maximum [Member]
Risk-free rate		1.62%
Expected volatility		617.00%
Expected life of warrants	8 years 9 months	5 years 7 months 1 day

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EQUITY TRANSACTIONS (Detail 1) - Warrants [Member] - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Outstanding, Beginning Balance	9,724,369	8,401,221
Granted	0	60,000
Forfeited Or Expired	0	0
Exercised	0	1,681,022
Outstanding, Ending Balance	9,724,369	6,780,199
Exercisable (Vested), Ending Balance	9,724,369	6,780,199
Weighted Average Exercise Price, Beginning Balance	$ 2.75	$ 1.135
Grantes, Weighted Average Exercise Price	0	3.883
Forfeited Or Expired, Weighted Average Exercise Price	0	0
Exercised, Weighted Average Exercise Price	0	1.215
Weighted Average Exercise Price, Ending Balance	2.75	1.139
Exercisable (Vested), Weighted Average Exercise Price, Ending Balance	$ 2.75	$ 1.139
Weighted Average Contractual Life in Years, Beginning Balance	1 year 8 months 8 days	2 years 1 month 25 days
Weighted Average Contractual Life in Years, Granted		4 years 6 months 7 days
Weighted Average Contractual Life in Years, Exercised		3 years 1 month 3 days
Weighted Average Contractual Life in Years, Ending Balance	1 year 5 months 12 days	1 year 7 months 18 days
Exercisable (Vested), Weighted Average Contractual Life in Years, Ending Balance	1 year 5 months 12 days	1 year 7 months 18 days
Aggregate Intrinsic value, Beginning Balance	$ 6,515,327	$ 7,453,214
Aggregate Intrinsic value, Granted	121,018	18,000
Aggregate Intrinsic value, Forfeited Or Expired	0	0
Aggregate Intrinsic value, Exercised	0	0
Aggregate Intrinsic value, Ending Balance	9,724,369	18,277,625
Exercisable (Vested), Aggregate Intrinsic value, Ending Balance	$ 9,724,369	$ 18,277,625

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EQUITY TRANSACTIONS (Detail 2) - Options [Member] - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Outstanding, Beginning Balance	5,834,268	2,159,269
Exercisable (Vested), Beginning Balance	3,159,268	888,659
Granted	0	75,000
Forfeited Or Expired	0	50,000
Exercised	0	0
Outstanding, Ending Balance	5,834,268	2,184,269
Exercisable (Vested), Ending Balance	3,159,268	938,659
Weighted Average Exercise Price, Beginning Balance	$ 1.665	$ 1.606
Exercisable (Vested), Weighted Average Exercise Price, Beginning Balance	1.517	1.581
Grantes, Weighted Average Exercise Price	0	2.560
Forfeited Or Expired, Weighted Average Exercise Price	0	1.050
Exercised, Weighted Average Exercise Price	0	0
Weighted Average Exercise Price, Ending Balance	1.665	1.651
Exercisable (Vested), Weighted Average Exercise Price, Ending Balance	$ 1.517	$ 1.739
Weighted Average Contractual Life in Years, Beginning Balance	5 years 4 months 20 days	5 years 7 months 28 days
Exercisable (Vested), Weighted Average Contractual Life in Years, Beginning Balance	4 years 10 months 28 days	5 years 17 days
Weighted Average Contractual Life in Years, Granted	0 years	6 years 10 months 4 days
Weighted Average Contractual Life in Years, Forfeited or Expired	0 years	0 years
Weighted Average Contractual Life in Years, Exercised	0 years	0 years
Weighted Average Contractual Life in Years, Ending Balance	5 years 1 month 20 days	5 years 7 months 1 day
Exercisable (Vested), Weighted Average Contractual Life in Years, Ending Balance	4 years 8 months 1 day	5 years 3 months 3 days
Aggregate Intrinsic value, Beginning Balance	$ 3,186,870	$ 1,919,129
Exercisable (Vested), Aggregate Intrinsic value, Beginning Balance	3,141,183	749,470
Aggregate Intrinsic value, Granted	0	105,000
Aggregate Intrinsic value, Forfeited Or Expired	0	0
Aggregate Intrinsic value, Exercised	0	0
Aggregate Intrinsic value, Ending Balance	5,484,212	5,010,909
Exercisable (Vested), Aggregate Intrinsic value, Ending Balance	$ 2,906,527	$ 2,149,710

XML

EQUITY TRANSACTIONS (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended		12 Months Ended
	Feb. 02, 2022	Jan. 26, 2022	Mar. 31, 2023	Mar. 31, 2022	Feb. 07, 2022	Mar. 30, 2022	Jan. 13, 2022
Employee Stock Compensation			$ 376,573	$ 199,843
Common Shares Class A [Member]
Issuance of common shares			884,229
Conversion of debt and interest			$ 1,006,726
Common Shares Class A [Member] | Warrant A-10 [Member]
Shares Issued		10,000
Exercise price		$ 2.05
Warrants expiration date		Jan. 26, 2024
Common Shares Class A [Member] | Warrant C-37 [Member]
Conversion of debt and interest	$ 600,000
Shares Issued	60,000
Exercise price	$ 1.50
Warrants expiration date	Feb. 02, 2023
Warrant A-11 [Member] | Common Shares Class A [Member]
Shares Issued					50,000
Exercise price					$ 4.25
Warrants expiration date					Feb. 07, 2026
Warrant Exercise [Member] | Common Shares Class A [Member]
Shares Issued				22,500		47,500	117,250
Exercise price				$ 1.50		$ 1.50	$ 1.50

XML

CONTINGENCIES (Details Narrative)			3 Months Ended
	Oct. 08, 2022 USD ($) ft²	Oct. 08, 2021 USD ($) ft²	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Aug. 17, 2021 ft²
Rent for the office space	$ 4,745	$ 4,745	$ 5,726
Commercial Land Lease sublease area | ft²					7
Warehouse space | ft²	6,700	6,700
Amended lease			The amended lease has a ten year term and $5,869 per month rate
Rental lease expired date			December 2026
Sublease Term			2 years
Accrued payable			$ 110,705	$ 106,886
LRR [Member]
Rent for the office space			$ 1,702
Rental lease expired date			January 1, 2030
Commonwealth of Kentucky [Member] | Kentucky Energy Cabinet [Member]
Claims Amounts			$ 1,157,580
Accrued payable			1,432,077
Mine Health Safety [Member]
Claims Amounts			856,498
Accrued payable			$ 351,303