What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-15 compared with 2023-03-31 · 88 added, 25 removed, 55 unchanged (67% of the section changed)

11 unchanged sentences

Year Ended December 31, 2023 compared to Year Ended December 31, 2022.

Year Ended December 31,

$ (22,983,154 )

Metal recovery and sales

Royalty income

Total revenue

(22,730,194 )

Operating expenses (income)

Cost of coal sales and processing

(10,075,770 )

Amortization of mining rights

General and administrative

Professional fees

Production taxes and royalties

Gain on sale of equipment

(16,388,158 )

Total operating expenses

(30,795,182 )

Net loss from operations

(11,422,333 )

(19,487,321 )

Other income (expense)

Other income and (expense)

Unrealized gain on short-term investments

Gain on cancelation of debt

Gain on sales of patents

(16,000,000 )

Interest income

Interest expense

Total other (expenses) income

(18,074,402 )

$ (11,455,086 )

$ (1,445,672 )

$ (9,755,650 )

Net loss per share - basic

Weighted average shares outstanding - basic

Revenues for the year ended December 31, 2023 were $16,744,075 and 2022 were $39,474,269, respectively.

The primary drivers for revenue increase was additional demand for coal since Covid-19.

Trends which led to revenue growth were the re-opening of our mines after Covid-19 lock down and demand for our coal and the products that it is used in.

To meet specific demand and customer requests, Perry County and Carnegie 1 were re-opened.

These two mines were re-opened before others because they offered the desired quality of our customers while focusing on the steel and specialty markets.

The primary drivers for revenue decline were slowing down of global infrastructure markets, international import bans and overall softening in customer pricing.

In response to slower demand and customer requests, Perry County was idled.

Contribution of revenues:

All our sales are located in the United States with our operations located in the Central Appalachian basin of eastern Kentucky and West Virgina.

Our coal sales are categorized as metallurgical coal (“Met”) used for steel making, pulverized coal injections (“PCI”) used in the steel making process and high-BTU, low sulfur, low moisture bituminous coal (“High BTU”) used for a variety of uses within several industries, including industrial customers and specialty products.

Disaggregated information about our revenue is presented below:

For the year Ended December 31,

Year ended 2023

For the year ended 2023, tons sold to steel making end users amounted to 67,372.57 with a realized sales price of $180.32.

Steelmaking coal was contributed by McCoy Elkhorn’s Carnegie 1 and Carnegie 2 mines.

For the year ended 2022, tons sold to industrial and specialty end users amounted to 105,577.11 with a realized sales price of $153.43.

For the year ended 2022, 100% of coal sales revenue was contributed by Perry County for industrial and specialty end users.

Steelmaking coal was contributed by McCoy Elkhorn’s Carnegie 1 mine.

For the year ended 2023, tons sold to industrial and specialty end users amounted to 0 tons.

Year ended 2022

For the year ended 2022, tons sold to steel making end users amounted to 111,807 with a realized sales price of $233.11.

Steelmaking coal was contributed by McCoy Elkhorn’s Carnegie 1 mine for the year ended 2021.

For the year ended 2021, tons sold to industrial and utility end users amounted to 79,546.75 with a realized sales price of $83.17.

Steelmaking coal was contributed by McCoy Elkhorn’s Carnegie 1 and Carnegie 2 mines.

For the year ended 2022, tons sold to industrial and specialty end users amounted to 105,577.11 with a realized sales price of $153.43.

For the year ended 2022, 100% of coal sales revenue was contributed by Perry County for industrial and specialty end users.

Total Operating Expenses for the year ended December 31, 2022 were $63,471,633 and 2021 were $36,088,714, respectively.

The primary driver for the increase in operating expenses was restarting production in the mines due to an increase of demand since Covid-19.

Trends which led to higher expenses are inflation in labor and consumable goods.

Cost and Expenses.

Cost of sales.

The decrease in cost of sales is due to lower sales volumes as a result of the ceasing of production on the Perry County mines.

The decrease in accretion expense in the year ended December 31, 2023 is driven primarily by the reduced liability balance due to no changes in the previous estimates.

Depreciation.

The decrease in depreciation expense in the year ended December 31, 2023 is primarily due to the Company’s significant disposal of fixed assets in 2022.

The Company has acquired the majority of new fixed assets under financing leases.

General and administrative.

The increase in general and administrative expense in the year ended December 31, 2023 is primarily due to higher compensation cost, higher stock compensation recognized during the year and increase in travel and health benefits.

Production taxes and royalties.

The decrease in production taxes and royalties in the year ended December 31, 2023 is due to lower sales volumes and prices.

To meet specific demand and customer requests, Perry County and Carnegie 1 were re-opened with updated mine plans and more efficient long term operating structure.

This re-working included one time development costs for expanding and increasing efficient capacity at the operating locations.

Total Other Income/(Expenses) for the period ended December 31, 2022 were $312,179 and 2021 were $(232,994), respectively.

Financial Condition.

Total Assets as of December 31, 2022 amounted to $55,916,349 and 2021 amounted to $42,872,702, respectively.

The primary driver for the higher asset balance was an increase in cash from debt and equity.

Total Liabilities as of December 31, 2022 amounted to $55,631,653 and 2021 amounted to $45,218,110, respectively.

The primary drivers for the decrease in liability balance was execution of convertible debt.

This re-working included one-time development costs for expanding and increasing efficient capacity at the operating locations was primarily recognized in the prior period and is the reason for the significant decrease in December 31, 2023.

The Company expects to continue to improve mining performance and offset inflationary pressures through efficiency gains.

Other income (expenses).

The decrease in other income (expenses) is primarily due to the sale of patents that occurred totaling $16,000,000, the forgiveness of the PPP loan of $1,521,304 and the cancellation of notes payable by issuing common stock in lieu of payment to reduce our debt balance in prior year.

Liquidity and Capital Resources.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.

The Company will use a combination of cash proceeds from operations, conversation of common stock warrants, issuance of common stock for cash or for debt conversion and issuance of new debt instruments to satisfy both short term and long term obligations, including the settlement of payables and debt that are in default of their original agreements.

Our primary sources of liquidity are derived from existing unrestricted cash balances, proceeds from future coal sales, and certain financing arrangements.

Our primary capital resource requirements stem from the cost of coal sales and processing, general and administrative, capital expenditures, debt service obligations, reclamation obligations, and collateral requirements.

As of December 31, 2023, the company has a cash balance of $7,034,370 and working capital of $16,814,931.

The Company will use a combination of cash proceeds from operations, issuance of common stock for cash or for debt conversion and issuance of new debt instruments to satisfy both short term and long term obligations, including the settlement of payables and debt that are in default of their original agreements.

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred recurring losses and as of December 31, 2023, had an accumulated deficit of $178,694,329.

For the year ending December 31, 2023, the Company sustained a net loss of $11,455,086.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued.

These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

The Company’s continuation as a going concern is contingent upon its ability to obtain additional financing and to generate revenue and cash flow to meet its obligations on a timely basis.

The Company will continue to seek to raise additional funding through debt or equity financing during the next twelve months from the date of issuance of these financial statements.

Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.

There is no guarantee the Company will be successful in achieving these objectives.

We are not aware of any trends or known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in material increases or decreases in liquidity.

Business Effect of Covid-19.

During 2022 and 2021, 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.

Year Ended December 31, 2023 compared to Year Ended December 31, 2022.

Years Ended December 31,

Consolidated statement of cash flow data:

Cash (used for) provided by operating activities

$ (14,515,241 )

Cash provided by (used for) investing activities

Cash provided by (used for) financing activities

Net change in cash and restricted cash

$ (12,995,695 )

Cash used for operating activities during 2023 was $14,515,241 compared to cash provided by $2,549,189 in 2022.

The change was primarily due to a net loss of $11,455,086, offset by amortization of mining rights of $1,240,914, accretion expense of $993,165, amortization of right-of-use asset of $626,253, option expense of $1,506,292, unrealized gain on short-term investments of $499,639, gain on sale of equipment of $8,475,468 and a change in working capital of $1,284,489.

Cash used by investing activities during 2023 was $28,833,246 compared to $1,125,759 in 2022.

The change was primarily due to an increase in the net purchase of short-term investments of $29,797,565 in 2023 compared to $0 in 2022.

Cash provided by financing activities during 2023 was $37,387,162 compared to cash used by financing activities in 2022 of $1,015,848 for the prior year.

The change was due to $1,112,850 repayments on long term debt, $5,599,988 repayments of finance lease liabilities, and $44,100,000 proceeds from tax exempt bonds.

Capital Resources.

32 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis