What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-04-15 compared with 2023-03-31 · 297 added, 323 removed, 1128 unchanged (35% of the section changed)

33 unchanged sentences

Chief Operating Officer

Michael Layman

Gerardine Botte, PH.D.

50 unchanged sentences

He has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Michael Layman – Director

Layman is a well-established financial industry executive with a track record for driving value and growth for both private and publicly traded companies.

Layman currently serves as General Partner/CEO of Emerald Shoals Targeted Opportunities Fund LP, a hybrid growth fund backed by a network of ultra-high net worth individuals seeking novel opportunities to invest in high-growth catalyst driven companies.

Layman also is the chairman & managing director of LF Athens Capital, a Delaware series LLC that seeks to provide attractive investment opportunities in private and small cap public companies.

Laymen also serves on the board of directors of Land Betterment Corp and Clarametyx Biosciences Inc.

Prior to his current role at Emerald Shoals and LF Athens, Mr.

Layman served at a large top-four brokerage house where he was co-owner of a private wealth management group where he was responsible for identifying attractive and undervalued investment opportunities.

Additionally, he also aided in the development and implementation of various investment strategies based on differing types of needs from conservative to aggressive growth.

Additionally, Mr.

Layman previously worked for a private equity fund in New York where he established a strong network of relationships with research analysts and investment bankers at a number of Wall Street firms.

Layman obtained his Bachelor of Arts degree in business from Otterbein University.

The Board nominated Mr.

Layman to serve as a director because of his leadership in the finance industry and assisting companies with capital raising.

Josh Hawes – Director

Josh Hawes is an Independent Board Director at American Resources Corporation (AREC).

He brings over 15+ years of leadership experience, specializing in commodities, buy-side/sell-side investments, and advanced technologies, to assist AREC with its capital markets plan and corporate strategy.

He has a vast knowledge of capital markets integration with strategic vision and vertical integration.

Josh is currently the chair of the Audit and Compensation committees for AREC.

His prior experience includes chief strategy officer of USA Rare Earth, CEO of Delta1x and Hawking Alpha.

Hawes holds licenses spanning commodities, investment banking, public, and private securities, including Series 3, 63, 65, 7, 79, 82, and SIE.

As well, Josh holds several professional designations, such as Wharton Business School’s Corporate Governance program certificate , “Maximizing Your Effectiveness in the Boardroom,” and University of Cambridge Judge Business School, “ Circular Economy and Sustainability Strategies.” He is also holder of the Chartered Market Technician, Certified Hedge Fund Professional, and Qualified Family Office Professional A Wireless Software Engineering graduate from Auburn University.

The Board nominated Josh to serve as a director because of his experience and relationships in the critical minerals sector, banking sector and his experience in growth businesses.

He has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

38 unchanged sentences

Jensen, our Chief Executive Officer, Thomas M.

Sauve, our President, Michael Layman, Gerardine Botte, PHD, and Courtenay O.

Sauve, our President, Josh Hawes, Gerardine Botte, PHD, and Courtenay O.

Taplin, of which Ms.

Botte and Messrs Layman and Taplin are considered independent in accordance under the requirements of the NASDAQ, NYSE and SEC.

Botte and Messrs Hawes and Taplin are considered independent in accordance under the requirements of the NASDAQ, NYSE and SEC.

Limitation of Director Liability;

30 unchanged sentences

As required by the rules of the SEC, the audit committee consists solely of independent directors, who are Ms.

Botte and Messrs Layman, and Taplin.

Botte and Messrs Hawes, and Taplin.

SEC rules also require that a public company disclose whether its audit committee has an “audit committee financial expert” as a member.

58 unchanged sentences

There is no employment agreement in place for Mr.

200,000 Options were issued on December 13, 2021.

0 Options were issued during 2022.

The value in the option awards represents Black-Scholes Option Pricing Model.

7 unchanged sentences

Gerardine Botte (5)

Josh Hawes (6)

The value of the Option Award to Directors in Column (d) represents the amortized book value of warrants priced using the Black-Scholes Option Pricing Model, and does not represent the actual cash value of the warrants to the warrant holder.

4 unchanged sentences

Jensen for his service on the board and as serving as chairman and member of the strategic committee.

During 2022, 400,000 of options were issued to Mr.

Jensen for his service on the board and as serving as chairman and member of the strategic committee.

The value of the options have been included in the officer compensation table.

4 unchanged sentences

During 2022, 300,000 of options were issued to Mr.

Jensen for his service on the board and as serving as chairman and member of the strategic committee.

Sauve for his service on the board and as serving member of the strategic committee.

The value of the options have been included in the officer compensation table.

5 unchanged sentences

Taplin for his service on the board.

During 2022, 150,000 options were issued to Mr.

Taplin for his service on the board.

Layman was appointed as a director on July 16, 2020.

10 unchanged sentences

Botte for her service on the board.

During 2022, 200,000 options were issued to Dr.

Botte for her service on the board.

Hawes was appointed as a director on XX, 2023.

During 2024, 250,000 options were issued to Mr.

Hawes for his service on the board and chair of the audit and compensation committees.

No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.

3 unchanged sentences

The payment of such bonus and/or incentive stock options shall be in the sole discretion of the Company’s Board of Directors.

The in-place contracts we effective beginning January 1, 2023 and expires December 31, 2023.

The in-place contracts we effective beginning January 1, 2023 and expired December 31, 2023 with one year automatic extensions effective through December 31, 2024.

Outstanding Equity Awards

47 unchanged sentences

Golden Properties, Ltd.

White River Ventures LLC (2) (4)

Midwest General Investment Company LLC (2) (5)

A person is deemed to be the beneficial owner of securities that can be acquired by such a person within 60 days upon exercise of options, warrants or convertible securities.

Each beneficial owner’s percentage ownership is determined by assuming that options, warrants and convertible securities that are held by such a person (but not those held by any other person) and are exercisable within 60 days from that date have been exercised;

Based on 68,793,224 shares of Common Stock deemed to be outstanding as if one or more warrants were exercised up to the maximum amount of 9.99% (or 6,872,443 shares) of the issued and outstanding number of shares at December 31, 2022.

Based on 78,213,454 shares of Common Stock deemed to be outstanding as of December 31, 2023.

This percentage has been rounded for convenience;

6 unchanged sentences

is presently deemed the beneficial owner of 14,350,711 shares of our Common Stock pursuant to Securities and Exchange Commission Rule 13d-3, promulgated under the Securities Exchange Act of 1934.

The full number of shares that Golden Properties’ beneficially owns (including all shares underlying all the warrants owned by Golden Properties and excluding those Class A Common shares owned by Alexander Lau and TAU Holdings as stated above) is 6,673,070 shares.

Represents shares gifted in an exempt transaction under Rule 16b-5 by Mark Jensen for no consideration to White River Ventures LLC, which is wholly owned by a family trust of which certain members of the Jensen family are beneficiaries.

Thomas Sauve serves as sole manager of this entity.

Represents shares gifted in an exempt transaction under Rule 16b-5 by Thomas Sauve for no consideration to Midwest General Investment Company LLC, which is wholly owned by a family trust of which certain members of the Sauve family.

Mark Jensen serves as sole manager of this entity.

Series A Preferred

12 unchanged sentences

These percentages have been rounded for convenience;

Jensen beneficially owns 92,264 shares of our Class A Common Stock through his equity ownership in T Squared Capital LLC, which shares are included in the table above.

Sauve beneficially owns 61,509 shares of our Class A Common Stock through his equity ownership in T Squared Capital LLC, which shares are included in the table above.

Jensen beneficially owns 89,981 shares of our Class A Common Stock through his equity ownership in Westside Advisors LLC,.

Sauve beneficially owns 59,988 shares of our Class A Common Stock through his equity ownership in T Squared Capital LLC and Westside Advisors LLC.

Certain Relationships and Related Transactions, and Director Independence.

37 unchanged sentences

Botte and Messrs.

Layman, Taplin are independent are independent within the meaning of the listing standards for general independence of the NASDAQ Capital Market.

Hawes, Taplin are independent are independent within the meaning of the listing standards for general independence of the NASDAQ Capital Market.

Under the listing standards, the Audit Committee is required to be composed solely of independent directors.

8 unchanged sentences

Audit fees – BF Borgers, PC

Audit related fees – BF Borgers, PC

All other fees

8 unchanged sentences

As a result, the audit committee did not preapprove all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors.

Since the formation of our audit committee, and on a goingforward basis, the audit committee has and will preapprove all auditing services and permitted nonaudit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for nonaudit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).

Since the formation of our audit committee, and on a going forward basis, the audit committee has and will preapprove all auditing services and permitted nonaudit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for nonaudit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).

Exhibits, Financial Statement Schedule.

99 unchanged sentences

Principal Executive Officer,

March 31, 2023

April 15, 2024

Chief Executive Officer, Chairman of the Board of Directors

1 unchanged sentence

Principal Executive Officer,

March 31, 2023

April 15, 2024

Chief Executive Officer, Chairman of the Board of Directors

Principal Financial Officer, Chief Financial Officer

March 31, 2023

April 15, 2024

/s/ Thomas M.

Director, President

March 31, 2023

/s/ Michael Layman

March 31, 2023

Michael Layman

April 15, 2024

/s/ Josh Hawes

April 15, 2024

/s/ Gerardine Botte

March 31, 2023

April 15, 2024

Gerardine Botte, PHD

/s/ Courtenay O.

March 31, 2023

April 15, 2024

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants

8 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Changes Stockholders’ Deficit

Consolidated Statements of Changes Stockholders’ Equity

Consolidated Statements of Cash Flows

5 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit.

In addition, the Company continues to experience negative cash flows from operations.

These factors raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

17 unchanged sentences

We have served as the Company's auditor since 2020

March 31, 2023

April 15, 2024

AMERICAN RESOURCES CORPORATION

1 unchanged sentence

Current assets:

Prepaid fees and deposits

Advances to related party

Accounts receivable

Short-term investments held in Trust Account - restricted

Prepaid expenses and other current assets

Total Current Assets

1 unchanged sentence

Property and Equipment, net

Long-term right of use assets, net

Right-of-use assets, net

Investment in LLC- Related Party

Notes receivables

LIABILITIES AND STOCKHOLDERS' DEFICIT

Liabilities And Equity

Current liabilities:

3 unchanged sentences

Accrued interest

Due to affiliate

Other Liabilities

Current portion of long term debt

Current portion of convertible debt (net of unamortized discount of $ 0 and $ 18,106 )

Current portion of lease liabilities, net

Current portion of convertible debt

Operating lease liabilities

Finance lease liabilities

Total current liabilities

Notes payable

Convertible note payables (net of unamortized discount of $ 0 and $ 22,549 )

Remediation liability

Lease liabilities, net

Bond payable, net

Operating lease liabilities, non-current

Finance lease liabilities, non-current

Total liabilities

Stockholders' deficit

Common stock:

$ 0.0001 par value;

Commitments and contingencies (Note 9)

Stockholders' equity:

Common stock, $ 0.0001 par value;

230,000,000 shares authorized, 892,044 and 0 shares issued and outstanding

3 unchanged sentences

( 167,239,243 )

Total stockholders' deficit

( 2,345,408 )

Total liabilities and stockholders' deficit

Total stockholders' equity

Total liabilities and stockholders' equity

The accompanying footnotes are integral to the consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,

Metal recovery and sales

1 unchanged sentence

Total revenue

Operating expenses (income)

Cost of coal sales and processing

( 21,687,656 )

( 7,088,951 )

( 1,344,047 )

( 1,096,283 )

( 2,157,763 )

( 1,980,026 )

Amortization of mining rights

( 1,238,449 )

( 1,246,740 )

General and administrative

( 4,020,464 )

( 3,884,464 )

Professional fees

( 1,103,322 )

( 1,387,430 )

Production taxes and royalties

( 3,785,049 )

( 1,306,150 )

( 28,134,883 )

( 18,098,670 )

Total expenses from operations

Gain on sale of equipment

( 8,475,468 )

( 4,510,043 )

Total operating expenses

Net loss from operations

1 unchanged sentence

( 19,487,321 )

Other income (expense)

Other income and (expense)

Unrealized gain on trading securities

Unrealized gain on short-term investments

Gain on cancelation of debt

Gain on Sales of Assets

Gain on sales of patents

Amortization of debt discount and debt issuance costs

Interest income

2 unchanged sentences

( 1,426,153 )

Net loss attributable to American Resources Corporation shareholders

Total other (expenses) income

$ ( 11,455,086 )

$ ( 1,445,672 )

Net loss per share - basic and diluted

Weighted average shares outstanding

Net loss per share - basic

Weighted average shares outstanding - basic

The accompanying footnotes are integral to the consolidated financial statements.

AMERICAN RESOURCES CORPORATION

STATEMENT OF STOCKHOLDERS’ DEFICIT

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

DECEMBER 31, 2023

paid in capital

Balance December 31, 2020

Balance as of December 31, 2021

$ 163,441,655

1 unchanged sentence

$ ( 2,345,408 )

Shares issued in connection with registered offering

Shares issued in connection with warrant and option conversions

3 unchanged sentences

Stock compensation – options

Assumption of membership interest

( 32,504,323 )

Repurchase of Shares Outstanding

( 1,445,672 )

Balance December 31, 2021

( 1,445,672 )

Balance as of December 31, 2022

$ 167,517,259

$ ( 167,239,243 )

Shares issued in connection with warrant and option conversions

Shares issued in connection with debt and payable conversions

Shares issued for services

Amortization of debt discount

Issuance of common shares for Convertible Debt Conversion

Issuance of common shares for consulting services

Stock compensation – options

Repurchase of Shares Outstanding

( 11,455,086 )

Balance December 31, 2022

Balance as of December 31, 2023

$ 178,910,546

$ ( 178,694,329 )

The accompanying footnotes are integral to the consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended

Cash Flows from Operating activities:

5 unchanged sentences

Accretion expense

Amortization of right-to-use assets

Accretion of right-to-use assets

Amortization of debt discount

Amortization of issuance costs and debt discount

Option Expense

Discount Amortization Conversion

Gain on sale of equipment

( 8,475,468 )

( 4,510,043 )

Unrealized gain on short-term investments

Gain on debt forgiveness

1 unchanged sentence

Issuance of common shares for services

Loan forgiveness - NMTC

Change in current assets and liabilities:

Accounts receivable

( 2,907,746 )

Prepaid expenses and other current assets

Accounts payable

( 1,081,075 )

Accounts payable

Accrued interest

Accounts payable related party- Due to Affiliates

Cash used in operating activities

Accounts payable related party

( 1,923,535 )

Right of use assets

Other Liabilities

Cash provided by operating activities

( 14,515,241 )

Cash Flows from Investing activities:

Cash received (paid) for PPE, net

Purchases of short-term investments

( 51,865,545 )

Proceeds from sales and maturities of short-term investments

Cash received (paid) for PPE, net

Cash invested in note receivable

1 unchanged sentence

( 18,284,866 )

( 2,500,000 )

Cash provided by investing activities

Cash used in investing activities

( 28,833,246 )

1 unchanged sentence

Cash Flows from Financing activities:

Principal payments on long term debt

Repayments on long term debt

( 1,112,850 )

Sale of Common Stock for Cash

Cash received from warrant and option conversions

Proceeds from convertible note

Convertible Note Conversions

Capitalized Interest

Issuance of common shares for debt settlement

( 2,214,603 )

1 unchanged sentence

Cash used to repurchase shares

Principal payments on finance lease

Cash provided by financing activities

Repayments of finance lease liabilities

( 5,599,988 )

( 1,270,810 )

Proceeds from tax exempt bonds, net

Cash provided by (used for) financing activities

( 1,015,848 )

Increase (decrease) in cash

( 5,599,988 )

Cash, beginning of year

Cash, end of year

Supplemental Information

Cash paid for interest

Cash and cash equivalents, including restricted cash, beginning of period

Cash and cash equivalents, including restricted cash, end of period

The accompanying footnotes are integral to the consolidated financial statements.

5 unchanged sentences

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 (RLMT), American Metals LLC (AM) and American Opportunity Venture II, LLC (AOV II).

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries American Carbon Corp (ACC), Deane Mining, LLC (Deane), 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 (RLMT), American Metals LLC (AM), American Opportunity Venture, LLC (AOV) and American Opportunity Venture II, LLC (AOV II).

All significant intercompany accounts and transactions have been eliminated.

11 unchanged sentences

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 company is the primary beneficiary of ERC Mining, LLC, which qualifies as a variable interest entity.

Accordingly, the assets, liabilities, revenue and expenses of ERC Mining, LLC have been included in the accompanying consolidated financial statements.

The company has no ownership in ERC Mining, LLC.

Determination of the company as the primary beneficiary is based on the power through its management functions to direct the activities that most significantly impact the economic performance of ERC Mining, LLC.

On March 18, 2016, the company lent ERC Mining, LLC $ 4,117,139 to facilitate the transaction described in Note 6, which represent amounts that could be significant to ERC.

No further support has been provided.

The company has ongoing involvement in the management of ERC Mining, LLC to ensure their fulfillment of the transaction described in Note 6.

The company is the primary beneficiary of Advanced Carbon Materials LLC (ACM), which qualifies as a variable interest entity.

5 unchanged sentences

Quest Processing was formed in November 2014 for the purpose of operating coal processing facilities and had no operations before March 8, 2016.

Quest Processing was dissolved on December 6, 2021.

ERC was formed in April 2015 for the purpose managing an underground coal mine and coal processing facility.

10 unchanged sentences

During 2022, American Rare Earth LLC was renamed to reElement Technology LLC.

During 2023, reElement’s corporate designation was converted to a corporation.

On June 28, 2020, American Metals LLC was created as a wholly owned subsidiary of ARC for the purpose of aggregating, processing and selling recovered steel and metals.

11 unchanged sentences

As such, the investment in Novusterra will be accounted for using the equity method of accounting.

Asset Acquisitions:

On September 23, 2019, American Resources Corporation, (“Buyer”) entered into a binding agreement with Bear Branch Coal LLC, a Kentucky limited liability company, Perry County Coal LLC, a Kentucky limited liability company, Ray Coal LLC, a Kentucky limited liability company, and Whitaker Coal LLC, a Kentucky limited liability company (each a “Seller” and collectively, “Sellers”).

The agreement was entered into as part of the bankruptcy proceedings of Cambrian Holding Company LLC, (“Cambrian), and is subject to approval by the United States Bankruptcy Court for the Eastern District of Kentucky (the “Bankruptcy Court”) in the chapter 11 bankruptcy cases of the Sellers, Case No.

19-51200(GRS), by entry of an order in form and substance acceptable to Sellers and Buyer (the “Sale Order).

Under the agreement of the Sale Order, each Seller will sell, transfer, assign, convey and deliver to American Resources Corporation, effective as of the Closing, all assets, rights, titles, permits, leases, contracts and interests of such Seller free and clear of all liens, claims, interests and encumbrances, to the fullest extent permitted by the Bankruptcy Court.

In consideration for the purchased assets, the Buyer will assume certain liabilities.

Additionally, the Buyer will assume all liabilities relating to the transferred permits and the associated reclamation and post-mining liabilities of the purchased assets.

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

As of the report date, the Company is in the process of transferring the permits.

On September 27, 2019, PCR closed and acquired certain assets in exchange for assuming certain liabilities of Perry County Coal, LLC and a cash payment of $1.

The preliminary fair values of the asset retirement obligation liabilities assumed were determined to be $ 2,009,181 .

Additional assumed liabilities total $ 1,994,727 .

The liabilities assumed do not require fair value readjustments.

The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset.

Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and a cash payment of $1, including direct acquisition costs, of which there were none.

The cost is allocated to the group of assets acquired based on their relative fair value.

Because the transaction closed near the end of the reporting quarter the values assigned were provisional as of December 31, 2020 while the company continues to gather information, including evaluations of mining permits, discovery of assumed unsecured payables and timing and extent of end of mine life cost.

As of September 30, 2020, the values assigned were deemed final.

The assets acquired and liabilities assumed of Perry County Coal, LLC were as follows at the purchase date:

Coal Inventory

Mine Development

Equipment - Underground

Equipment - Surface

Processing and Loading Facility

Reclamation liability

Accrued liabilities

On March 4, 2020, PCR entered into a sales agreement with an unrelated entity for three non-core permits which were acquired during the initial purchase on September 27, 2019.

At the time of the purchase, PCR did not assign any value to the permits as they were not within the company’s plans to operate.

The sale of the permits resulted in the release of $ 2,386,439 of reclamation bonds and $ 336,995 of asset retirement obligation liability.

Consideration received was $ 700,000 in cash and $ 300,000 in equipment.

The equipment has not been received as of the report date.

The transaction resulted in a gain on sale of $ 1,061,225 .

Going Concern:

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.

Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America.

19 unchanged sentences

Restricted cash:

As part of the Kentucky New Markets Development Program an asset management fee reserve was set up in the amount of $ 116,115 .

The funds are held to pay annual asset management fees to an unrelated party through 2021.

The balance as of December 31, 2021 and December 31, 2020 was $ 8,818 and $ 19,138 , respectively.

During the 2020 the Company established a reclamation bonding collateral fund.

The balance of the restricted cash being held totaled $ 736,540 and $ 355,770 as of December 31, 2022 and 2021, respectively.

Consist of reclamation bonding collateral fund and approximately $2.2 million held in trust related to the Tax Exempt Bond as of December 31, 2023.

Consist of reclamation bonding collateral funds as of December 31, 2022.

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 year ended December 31, 2023 and December 31, 2022.

1 unchanged sentence

Total cash and restricted cash presented in the consolidated statement of cash flows

Coal Property and Equipment are recorded at cost.

Short-term investment held in Trust Account – restricted:

Consist of U.S.

government securities, corporate fixed income, and U.S.

government securities that are held in trust related to the Tax Exempt Bond and are restricted as to withdrawal as required by the agreement entered into by the Company.

All investments are classified as trading securities as of December 31, 2023 and 2022.

Trading securities are recorded initially at cost and are adjusted to fair value at each reporting period with unrealized gains and losses recorded in current period earnings or loss.

Property and Equipment:

Property and Equipment are recorded at cost.

For equipment, depreciation is calculated using the straight-line method over the estimated useful lives of the assets, generally ranging from three to seven years.

3 unchanged sentences

If these assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets.

There was no impairment loss recognized during the period ending December 31, 2021.

There was no impairment loss recognized during the period ending December 31, 2022.

There was no impairment loss recognized during the period ending December 31, 2023 and 2022.

Costs related to maintenance and repairs which do not prolong the asset’s useful life are expensed as incurred.

1 unchanged sentence

Costs of developing new coal mines, including asset retirement obligation assets, are capitalized and amortized using the units-of-production method over estimated coal deposits or proven reserves.

Costs incurred for development and expansion of existing reserves are expensed as incurred.

Costs incurred for the development and expansion of existing reserves are expensed as incurred.

Cost of Goods Sold and Gross Profit:

7 unchanged sentences

The asset retirement obligation assets are amortized based on expected reclamation outflows over estimated recoverable coal deposit lives.

We are using a discount rates ranging from 6.16% to 7.22%, risk free rates ranging from 1.76% to 2.92% and inflation rate of 2% .

We are using discount rates ranging from 6.16% to 7.22%, risk free rates ranging from 1.76% to 2.92% and inflation rate of 2% .

Revisions to estimates are a result of changes in the expected spending estimate or the timing of the spending estimate associated with planned reclamation.

1 unchanged sentence

Activities include reclamation of pit and support acreage at surface mines, sealing portals at underground mines, and reclamation of refuse areas and slurry ponds.

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

During 2022 and 2021, $ 0 and $ 0 were incurred for gain loss on settlement on ARO.

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

During 2023 and 2022, $ 0 were incurred for gain or loss on settlement on ARO.

The table below reflects the changes to our ARO:

13 unchanged sentences

Revenue Recognition:

The Company adopted and recognizes revenue in accordance with ASC 606 as of January 1, 2018, using the modified retrospective approach.

The Company concluded that the adoption did not change the timing at which the Company historically recognized revenue nor did it have a material impact on its consolidated financial statements.

Revenue is recognized when performance obligations under the terms of a contract with our customers are satisfied;

2 unchanged sentences

Our revenue is comprised of sales of mined coal, sales of recovered metals and services for processing coal.

All of the activity is undertaken in eastern Kentucky and Southern Indiana.

All the activity is undertaken in eastern Kentucky and Southern Indiana.

Revenue from metal recovery and sales are recognized when conditions within the contract or sales agreement are met including transfer of title.

2 unchanged sentences

We typically do not include extended payment terms in our contracts with customers.

As such, spot sales prices and forward contract pricing has declined.

During late 2019 management anticipated adverse market conditions globally, and in response began to selectively reduce or idle coal production operations and furlough or terminate employees.

During Q1 2020, the worldwide COVID-19 outbreak sharply reduced worldwide demand for infrastructure and steel products and their necessary inputs including Metallurgical coal.

Company management fully idled the Company’s operations accordingly, and the operations have remained idled through the report date.

These recent, global market disruptions and developments are expected to result in lower sales and gross margins for the coal industry and the Company in 2020 and possibly beyond.

Our contracts with customers typically provide for minimum specifications or qualities of the coal we deliver.

Variances from these specifications or quantities are settled by means of price adjustments.

Generally, these price adjustments are settled within 30 days of delivery and are insignificant.

Customer Concentration and Disaggregation of Revenue :

As of December 31, 2022, and 2021 99.7 % and 75.3 % of revenue came from three coal customers and three coal customers, respectively.

During December 31, 2022 and 2021, 100 % and 95.1 % of revenue came from three and two metal recovery customers.

The Company’s concentration of contract receivables are as follows:

As of December 31,

* Represents amounts less than 10%

The Company’s concentration of revenues are as follows:

For the Year Ended

* Represents amounts less than 10%

As of December 31, 2023, and 2022 100 % and 99.7 % of revenue came from two coal customers and three coal customers, respectively.

During December 31, 2023 and 2022, 100 % and 100 % of revenue came from two and three metal recovery customers.

As of December 31, 2023, and 2022, 100 % and 100 % of outstanding accounts receivable came from two and two customers, respectively.

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For the year ended December 31, 2022 and 2021, 0 % and 0 % of generated from sales to the utility industry, respectively.

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-02 , Leases (“ASU 2016-02”) .

ASU 2016-02, along with related amendments issued from 2017 to 2018 (collectively, the “New Leases Standard”), requires a lessee to recognize a right-of-use asset and a lease liability on the balance sheet.

The Company adopted ASU 2016-02 effective January 1, 2019 using the modified retrospective approach and elected the option to not restate comparative periods in transition and also elected the package of practical expedients for all leases within the standard, which permits the Company not to reassess its prior conclusions about lease identification, lease classification and initial direct costs.

The Company leases certain equipment and other assets under noncancelable operating leases, typically with initial terms of 3 to 7 years.

Capital leases are recorded at the present value of the future minimum lease payments at the inception of the lease.

The gross amount of assets recorded under capital lease amounted to $ 333,875 , all of which is classified as surface equipment.

The Company leases certain office and facility space under noncancelable operating leases, typically with initial terms of 1 to 10 years.

Right to use assets recorded on the balance sheet as of December 31, 2022, associated with these leases amounted to $ 13,033,889 .

Right to use liabilities recorded on the balance sheet as of December 31, 2022, associated with these leases amounted to $ 11,788,486 .

For the Year Ended

The Company reviews all arrangements for potential leases, and at inception, determines whether a lease is an operating or finance lease.

Lease assets and liabilities, which generally represent the present value of future minimum lease payments over the term of the lease, are recognized as of the commencement date.

Leases with an initial lease term of twelve months or less are classified as short-term leases and are not recognized in the balance sheets unless the lease contains a purchase option that is reasonably certain to be exercised.

Lease term, discount rate, variable lease costs and future minimum lease payment determinations require the use of judgment and are based on the facts and circumstances related to the specific lease.

Lease terms are generally based on their initial non-cancelable terms, unless there is a renewal option that is reasonably certain to be exercised.

Various factors, including economic incentives, intent, past history and business needs are considered to determine if a renewal option is reasonably certain to be exercised.

The implicit rate in a lease agreement is used when it can be determined to value the lease obligation.

Otherwise, the Company’s incremental borrowing rate, which is based on information available as of the lease commencement date, including applicable lease terms and the current economic environment, is used to determine the value of the lease obligation.

Beneficial Conversion Features of Convertible Securities:

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When there is a subsequent change to the conversion ratio based on a future occurrence, the new conversion price may trigger the recognition of an additional beneficial conversion feature on occurrence.

The Company has a convertible note outstanding.

Principal and accrued interest is convertible into common shares at $ 1.05 per share.

The remaining balance of the convertible note outstanding converted to common shares during January 2023.

The Company’s convertible notes including principal and accrued interest was converted into common shares at $ 1.05 per share during January 2023.

Loan Issuance Costs and Discounts are amortized using the effective interest method.

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Allowance for trade receivables as of December 31, 2023 and 2022 amounted to $ 253,764 and 0 , respectively.

Allowance for other accounts receivables as of December 31, 2022 and 2021 amounted to $0 and $0, respectively.

Allowance for trade receivables as of December 31, 2022 and 2021 amounted to $ 0 , for both years.

Allowance for other accounts receivables, including note receivables as of December 31, 2023 and 2022 amounted to $ 0 and $ 1,744,570 , respectively.

The allowance related to the purchase of a note receivable from a third party.

The allowance as of December 31, 2022 related to the purchase of a note receivable from a third party.

The note receivable has collateral in certain mining permits which are strategic to KCC.

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Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable vesting period of the stock award (generally 0 to 5 years) using the straight-line method.

Stock compensation to employees is accounted for under ASC 718 and stock compensation to non-employees is accounted for under 2018-07 which was adopted on July 1 2018 and ASC 505 for periods before July 1, 2018 and did not have an impact to the financial statements.

Stock-based compensation to employees is accounted for under ASC 718, Compensation-Stock Compensation.

Stock-based compensation expense related to stock awards granted to an employee is recognized based on the grant-date estimated fair values of the awards using the Black Scholes option pricing model (“Black Scholes”).

The value is recognized as expense ratably over the requisite service period, which is generally the vesting term of the award.

We adjust the expense for actual forfeitures as they occur.

Stock-based compensation expense is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided.

Black-Scholes requires a number of assumptions, of which the most significant are expected volatility, expected option term (the time from the grant date until the options are exercised or expire) and risk-free rate.

Expected volatility is determined using the historical volatility for the Company.

The risk-free interest rate is based on the yield of US treasury government bonds with a remaining term equal to the expected life of the option.

Expected dividend yield is zero because we have never paid cash dividends on common shares, and we do not expect to pay any cash dividends in the foreseeable future.

Earnings Per Share:

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For the years ended December 31, 2022 and 2022, the Company had 9,626,770 and 5,990,270 outstanding stock options, respectively.

For the years ended December 31, 2022 and 2021, the Company had 0 and 0 shares of Series A Preferred Stock, respectively, that has the ability to convert at any time into 0 and 0 shares of common stock, respectively.

For the years ended December 31, 2022 and 2021, the Company had 0 and 0 shares of Series B Preferred Stock, respectively, that has the ability to convert at any time into 0 and 0 shares of common stock, respectively.

For the years ended December 31, 2023 and 2022, the Company had 0 shares of Series A Preferred Stock, that has the ability to convert at any time into 0 shares of common stock.

For the years ended December 31, 2023 and 2022, the Company had 0 shares of Series B Preferred Stock, that has the ability to convert at any time into 0 shares of common stock.

For the years ended December 31, 2023 and 2022, the Company had 6,364,269 and 6,364,269 restrictive stock awards, restricted stock units, or performance-based awards.

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NOTE 2 - PROPERTY AND EQUIPMENT

At December 31, 2022 and 2021, property and equipment were comprised of the following:

Processing and rail facility

Underground equipment

Surface equipment

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

Mine development

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On August 16, 2022 the Company entered into a Financial Lease for equipment for it facilitates with Maxus Capital Group.

At December 31, 2022 and 2021 Right of use assets and liabilities were comprised of the following:

As of December 31, 2023 and 2022 Right of use assets and liabilities were comprised of the following:

Expense Classification

Operating lease expense:

Amortization of ROU asset

General and administrative

Accretion of Operating lease liability

General and administrative

Total operating lease expense

Finance lease expense:

Amortization on lease assets

Interest on lease liabilities

Total finance lease expense

Other information related to leases is as follows:

Weighted-average remaining lease term:

Operating leases (in years)

Financing leases (in years)

Weighted-average discount rate:

Operating leases

Principal Office Lease

Kite Kentucky Lease

Rare Earth Commercial Land Lease

Rare Earth Commercial Purification Facility Lease

Financing leases

Amounts relating to leases were presented on the Balance Sheets as of December 31, 2023 and 2022 in the following line items:

Balance Sheet Classification

Operating lease assets

Right-of-use assets

Finance lease assets, net

Right-of-use assets

Total non-current assets

Operating lease liabilities

Finance lease liabilities

Operating lease liabilities

Operating lease liabilities, non-current

Finance lease liabilities

Finance lease liabilities, non-current

Total lease liabilities

The future minimum lease payments required under leases as of December 31, 2023 were as follows:

Operating Leases

Finance Leases

Rare Earth Equipment Lease

Equipment Lease

NOTE 4 - NOTES PAYABLE

Undiscounted cash flows

Less imputed interest

( 1,299,395 )

( 1,557,771 )

Present value of lease liabilities

NOTE 4 – NOTES & BONDS PAYABLE

During the year ended December 31, 2023 and 2022, principal payments on long term debt totaled $ 1,112,850 and $ 2,214,603 , respectively.

During the year ended December 31, 2023 and 2021, new debt issuances totaled $ 0 and $ 2,563,000 , respectively.

Short-term and Long-term debt consisted of the following at December 31, 2022 and 2021:

Short-term and Long-term debt consisted of the following as of December 31, 2023 and 2022:

Equipment Loans - ACC

Note payable to an unrelated company in monthly installments of $1,468, With interest at 6.95%, through maturity in March 2021, when the note is due in full.

The note is secured by equipment and a personal guarantee by an officer of the Company.

On December 7, 2017, ACC entered into an equipment financing agreement with an unaffiliated entity, to purchase certain surface equipment for $56,900.

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Loan proceeds were used directly to purchase equipment.

On May 9, 2018, ACC entered into a loan agreement with an unrelated party in the amount of $1,000,000 with a maturity date of September 24, 2018 with monthly payments of $250,000 due beginning June 15, 2018.

The note is secured by the assets and equity of the company and carries an interest rate of 0%.

Proceeds of the note were split between receipt of $575,000 cash and $425,000 payment for new equipment.

No payments have been made on the note which is in default.

The note is secured by the equipment purchased by the note and a personal guarantee of an officer.

ARC Corporate Loan

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On April 20, 2022 the Company entered into a loan agreement with an unrelated party in the amount of $45,000 and will repay $63,000.

On April 23, 2020, the Company received loan proceeds in the amount of approximately $2,649,800 under the Paycheck Protection Program (“PPP”).

The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business.

The loans and accrued interest are forgivable as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels.

The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the period.

On January 26, 2022, the Company received forgiveness of $1,521,304 of principal.

On September 11, 2020, the Company entered into a $1,493,233.65 settlement agreement with a non-related party.

Starting April 1, 2021, the note requires monthly payments of $100,000 until the balance is paid in full.

Equipment Loans - McCoy

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The note is secured by the equipment purchased with the note.

Total note payables

Current maturities

Total Long-term note payables, net of discount

Convertible notes payable consisted of the following at December 31, 2022 and 2021:

Total notes payable - current

Convertible notes payable consisted of the following as of December 31, 2023 and 2022:

In 2020, the Company created a convertible debt offering.

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Total convertible note payables, net of discount

Affiliate notes consisted of the following at December 31, 2022 and 2021:

Notes payable to affiliate, due on demand with no interest and is uncollateralized.

Equipment purchasing was paid by an affiliate resulting in the note payable.

Total affiliate note payables

Total interest expense was $ 1,336,997 in 2023 and $ 1,426,153 in 2022.

Future minimum principal payments, interest payments and payments on capital leases are as follows:

On May 31, 2023, the West Virginia Economic Development Authority (the “Issuer”) issued $45 million aggregate principal amount of Solid Waste Disposal Facility Revenue Bonds, Series 2023 (the “2023 Tax Exempt Bonds”) pursuant to an Indenture of Trust dated as of June 8, 2023 between the Issuer and UMB Bank N.A., as trustee (the “Trustee”).

The Tax Exempt Bonds are payable solely from payments to be made by the Company under the Loan Agreement as evidenced by a Note from the Company to the Trustee.

The proceeds of the Tax Exempt Bonds were used to finance certain costs of the acquisition, construction, reconstruction, and equipping of solid waste disposal facilities at the Company’s Wyoming County, West Virgina development, and for capitalized interest and certain costs related to issuance of the Tax Exempt Bonds.

The Tax Exempt Bonds bear interest of 9% and have a final maturity of June 8, 2038.

The Tax Exempt Bonds are subject to redemption (i) in whole or in part at any time on or after June 1, 2030 at the option of the Issuer, upon the Company’s direction at a redemption price of 103% between June 1, 2030, through May 31, 2031, 102% between June 1, 2031, through May 31, 2032, 101% between June 1, 2032, through May 31, 2033, 100% from June 1, 2033 and thereafter, plus interest accrued to the redemption date;

and (ii) at par plus interest accrued to the redemption date from certain excess Tax Exempt Bonds proceeds as further described in the Indenture of Trust.

The Company’s obligations under the Loan Agreement are (i) except as otherwise described below, secured by first priority liens on and security interests in substantially all of the Company’s and Subsidiary Guarantors’ real property and other assets, subject to certain customary exceptions and permitted liens, and in any event excluding accounts receivable and inventory;

and (ii) jointly and severally guaranteed by the Subsidiary Guarantors, subject to customary exceptions.

The Loan Agreement contains certain affirmative covenants and representations, including but not limited to:

(i) maintenance of a rating on the Tax Exempt Bonds;

(ii) maintenance of proper books of records and accounts;

(iii) agreement to add additional guarantors to guarantee the obligations under the Loan Agreement in certain circumstances;

(iv) procurement of customary insurance;

and (v) preservation of legal existence and certain rights, franchises, licenses and permits.

The Loan Agreement also contains certain customary negative covenants, which, among other things, and subject to certain exceptions, include restrictions on (i) release of collateral securing the Company’s obligations under the Loan Agreement;

(ii) mergers and consolidations and disposition of assets, and (iii) restrictions on actions that may jeopardize the tax-exempt status of the Tax Exempt Bonds.

The Loan Agreement contains customary events of default, subject to customary thresholds and exceptions, including, among other things:

(i) nonpayment of principal, purchase price, interest and other fees (subject to certain cure periods);

(ii) bankruptcy or insolvency proceedings relating to us;

(iii) material inaccuracy of a representation or warranty at the time made;

and (v) cross defaults to the Indenture of Trust, the guaranty related to the Tax Exempt Bonds or any related security documents.

NOTE 5 - RELATED PARTY TRANSACTIONS

During 2015, equipment purchasing was paid by an affiliate resulting in a note payable.

The balance of the note was $ 0 and $ 74,000 as of December 31, 2022 and 2021, respectively.

On April 30, 2017, the Company purchased $ 250,000 of secured debt that had been owed to that party, by an operating subsidiary of a related party.

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As such, the investment in AOVII has been eliminated in the accompanying financial statements.

As of June 30, 2022, AOVII has had no operational activity.

As of December 31, 2023, AOVII has had no operational activity.

Condensed Summary Financials as Of December 31, 2023:

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As such, the investment in Novusterra will be accounted for using the equity method of accounting.

As of June 30, 2022, Novusterra has had no operational activity.

Condensed Summary Financials as Of December 31, 2023:

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Cash and cash equivalents

Total current assets

Non-current assets:

Intangible assets

Operating lease right-of-use asset

Total non-current assets

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payables

Accrued interest

Other current liabilities

Current portion of operating lease liabilities

Total current liabilities

Long term debt, net of current portion

Operating lease liabilities, less current portion

Total liabilities

Commitments and contingencies

Stockholders’ Equity

Preferred stock - no par value;

400,000,000 shares authorized;

0 shares issued and outstanding as of December 31, 2021 and December 31, 2020

Class A Common stock - no par value;

2,600,000,000 shares and 2,400,000,000 shares authorized as of December 31, 2021 and December 31, 2020, respectively;

10,481,347 shares and 832,670 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

Class B Common stock - no par value;

0 shares and 200,000,000 shares authorized as of December 31, 2021 and December 31, 2020, respectively;

0 shares and 3,666,667 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

Accumulated deficit

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

Condensed Summary Financials as Of December 31, 2021:

Current assets:

Cash and cash equivalents

Accounts receivable

Prepaid expenses

Total current assets

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0 shares and 3,666,667 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated deficit

( 1,403,857 )

Total stockholders’ equity

Total Liabilities and Stockholders’ Equity

NOTE 6 – KENTUCKY NEW MARKETS DEVELOPMENT PROGRAM

On March 18, 2016, Quest Processing entered into two loans under the Kentucky New Markets Development Program for a total of $ 5,143,186 .

Quest Processing paid $ 460,795 of debt issuance costs resulting in net proceeds of $ 4,682,391 .

The Company retains the right to call $ 5,143,186 of the loans in March 2023.

State of Kentucky income tax credits were generated for the lender which the Company has guaranteed over their statutory life of seven years in the event the credits are recaptured or reduced.

At the time of the transaction, the income tax credits were valued at $ 2,005,843 .

The Company has not established a liability in connection with the guarantee because it believes the likelihood of recapture or reduction is remote.

On March 18, 2016, ERC Mining LLC, an entity consolidated as a VIE, lent $4,117,139 to an unaffiliated entity, as part of the Kentucky New Markets Development Program loans.

The note bears interest at 4 % and is due March 7, 2046 .

The balance as of December 31, 2021 and 2020 was $ 0 and $ 4,117,139 , respectively.

Payments of interest only are due quarterly until March 18, 2023 at which time quarterly principal and interest are due.

The note is collateralized by the equity interests of the borrower.

The Company’s management also manages the operations of ERC Mining LLC.

ERC Mining LLC has assets totaling $ 4,117,139 and liabilities totaling $ 4,415,860 as of December 31, 2021 and 2020, respectively, for which there are to be used in conjunction with the transaction described above.

Assets totaling $ 3,325,401 and $ 3,490,087 and liabilities totaling $ 4,117,139 and $ 4,117,139 , respectively, are eliminated upon consolidation as of December 31, 2021 and 2020.

The Company’s risk associated with ERC Mining LLC is greater than its ownership percentage and its involvement does not affect the Company’s business beyond the relationship described above.

On November 9.

2021, Quest Processing fulfilled all obligations of the loans under the Kentucky New Markets Development Program.

As such, all amounts due under the notes were forgiven and ongoing requirements were ended.

NOTE 6 – INVESTMENTS

The Company has invested in marketable debt securities, primarily highly liquid U.S.

Treasury securities and investment grade corporate bonds.

These investments are held in the custody of a major financial institution.

These securities are classified as available-for-sale securities and, accordingly, the unrealized gains and losses are recorded through other comprehensive income.

The Company’s investments in available-for-sale marketable securities are as follows:

December 31, 2023

Available-for-sale:

government and agency securities

The Company classifies its investments as current based on the nature of the investments and their availability to provide cash for use in current operations, if needed.

NOTE 7 - INCOME TAXES

2 unchanged sentences

accrued expenses.

Deferred tax liability and assets consisted of $ 344,509 and $ 6,366,032 at December 31, 2022 and 2021, respectively, which was fully reserved.

Deferred tax assets consist of net operating loss carryforwards in the amount of $ 23,831,009 and $ 24,175,518 at December 31, 2022 and 2021, respectively, which was fully reserved.

Deferred tax liability and assets consisted of $ 1,827,392 and $ 344,509 as of December 31, 2023 and 2022, respectively, which was fully reserved.

Deferred tax assets consist of net operating loss carryforwards in the amount of $ 25,658,401 and $ 23,831,009 as of December 31, 2023 and 2022, respectively, which was fully reserved.

The net operating loss carryforwards for years 2015, 2016, 2017, 2018, 2019, 2020, and 2021 begin to expire in 2035 .

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Common Share Transactions

On March 17, 2021, 425,000 of restricted common shares were sold.

Gross proceeds to the Company amounted to $1,275,000 .

On June 9, 2021, the Company issued 8,600,000 shares of Class A Common Stock.

Net proceeds to the Company after offering expenses amounted to $27,943,000 .

During 2022, the Company issued 549,395 share of Class A Common Stock pursuant to warrant conversions.

1 unchanged sentence

During 2022, the Company issued 20,000 shares of Class A Common Stock pursuant to various consulting arrangements.

During 2022, the Company repurchased 86,410 shares of Class A Common Stock.

During 2023, the Company issued 0 share of Class A Common Stock pursuant to warrant conversions.

1 unchanged sentence

During 2022, the Company issued 49,020 shares of Class A Common Stock pursuant to various consulting arrangements.

During 2022, the Company repurchased 86,410 shares of Class A Common Stock.

Common Stock Option Transactions

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The options have an expiration of November 22, 2027 and vest immediately .

During December 2021, the Company issued 1,020,000 Employee Stock options under the current plan.

During July and September 2022, the Company issued 2,675,000 Employee Stock options under the current plan.

The individual option awards vest over a period of 1 to 9 years .

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New Warrant Issuances

On January 26, 2021, the Company issued Common Stock Purchase Warrant “A-10” for rare earth capture advisory.

The warrant provides the option to purchase 10,000 Class A Common Shares at a price of $ 2.05 .

The warrants expire on January 26, 2024 .

On February 2, 2021, the Company issued Common Stock Purchase Warrant “C-37” in conjunction with the issuance of $ 600,000 convertible note.

The warrant provides the option to purchase 60,000 Class A Common Shares at a price of $ 1.50 .

The warrants expire on February 2, 2023 .

On February 7, 2021, the Company issued Common Stock Purchase Warrant “A-11” for rare earth processing advisory.

The warrant provides the option to purchase 50,000 Class A Common Shares at a price of $ 4.25 .

The warrants expire on February 7, 2026 .

On March 11, 2021, the Company issued Common Stock Purchase Warrant “C-38” in conjunction with a restricted stock purchase.

The warrant provides the option to purchase 42,500 Class A Common Shares at a price of $ 5.00 .

The warrants expire on March 11, 2023 .

On March 12, 2021, the Company issued Common Stock Purchase Warrant “C-39” in conjunction with a restricted stock purchase.

The warrant provides the option to purchase 42,500 Class A Common Shares at a price of $ 5.00 .

The warrants expire on March 12, 2023 .

On March 15, 2021, the Company issued Common Stock Purchase Warrant “C-39” in conjunction with consulting services.

The warrant provides the option to purchase 75,000 Class A Common Shares at a price of $ 4.59 .

The warrants expire on March 15, 2026 .

On March 16, 2021, the Company issued Common Stock Purchase Warrant “C-40” in conjunction with a restricted stock purchase.

The warrant provides the option to purchase 21,250 Class A Common Shares at a price of $ 5.00 .

The warrants expire on March 16, 2023 .

On June 9, 2021, the Company issued Common Stock Purchase Warrant “C-38” in conjunction with a common stock offering.

The warrant provides the option to purchase 2,150,000 Class A Common Shares at a price of $ 3.50 .

The warrants expire on June 9, 2026 .

On June 9, 2021, the Company issued Common Stock Purchase Warrant “C-39” in conjunction with a common stock offering.

The warrant provides the option to purchase 2,150,000 Class A Common Shares at a price of $ 3.50 .

The warrants expire on June 9, 2026 .

On July 28, 2022, the Company issued Common Stock Purchase Warrant “A-12” in conjunction with a IR Services.

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Expected life of warrants

.47 - 9 years

Company Warrants:

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Outstanding - December 31, 2022

Exercisable (Vested) - December 31, 2021

Forfeited or Expired

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As of the balance sheet date, the West Virginia permit transfers have not yet been approved.

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

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

Our principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038.

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The is for the period of 2 years with a rate of $4,745.83 a month.

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.

On August 11, 2023 American Carbon Corp (“ACC”) entered into a coal sale agreement with Marco International Corporation.

The agreement is for an amount up to $ 20,000,000 and is based on an advance rate of 70 % of the index pricing value of accepted coal and the agreement carries a premium of 3.25 % of the index pricing.

As of the report date, $ 2,020,311 has been sold under this agreement.

On August 13, 2023 American Resources Corporation (“American Resources” or the “Company”), received a non-binding letter of interest for the assets of American Carbon Corporation (“American Carbon” or “ACC”), from a non-affiliated party.

Total consideration for ACC’s assets is approximately $ 300,000,000 of cash value which consists of:

(i) $ 20,000,000 cash at closing and (2) balance to be paid out as a royalty agreement at a rate of 10 % plus a profit split to determined subject to further diligence.

NOTE 10 - SUBSEQUENT EVENTS

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.

On February 5, 2024, American Carbon entered into a Share Purchase Agreement (“Purchase Agreement”) with T.R.

Mining & Equipment Ltd.

(“TR Mining”), to where ACC has purchased 51 % of the fully diluted shares outstanding of TR Mining in exchange for approximately 6% of the primary shares outstanding of ACC.

The Purchase Agreement was fully executed and closed on February 5, 2024 .

On March 4, 2024, members of the American Resources Corporation’s (“American Resources” or the “Company”) Board of Directors received an unsolicited investment letter (“Shareholder Investment Letter”) from a current shareholder and former board member of American Resources Corporation.

The letter references the strategic direction of the Company along with to its wholly owned subsidiary, ReElement Technologies Corporation (“ReElement”).

The investment letter is currently under review and carries the following details:

The spinout or sale of American Carbon Corporation

The spinout of ReElement Technologies Corporation

The spinout of interest in Novusterra Inc.

The focus of American Resources Corporation post such events on the critical mineral industry growth.

The ReElement Technologies Corporation Term Sheet is currently under review and carries the following details:

Pre Money Valuation:

$ 300 million

Financing Size:

Minimum of $7 million up to $50 million

Management Participation:

Requirement of members of current management to participate in the round, which is agreeable by certain members

On March 28, 2024, American Resources Corporation’s (“American Resources” or the “Company”) wholly owned subsidiary, ReElement Technologies Corporation (“ReElement”), closed a Bond Purchase Agreement (“Purchase Agreement”) with Hilltop Securities Inc.

(the “Underwriter”), Knott County, Kentucky (the “Issuer”), a county and political subdivision organized and existing under the laws of the Commonwealth of Kentucky (the “Commonwealth”), whereby the Underwriter agrees to purchase from the Issuer, and the Issuer agrees to sell and deliver to the Underwriter, all (but not less than all) of the Knott County, Kentucky Industrial Building Revenue Bonds (Solid Waste Project), Series 2024 (the “Bonds”), at the purchase price of $ 150,000,000 (which is equal to the aggregate principal amount of the Bonds).

The Bonds have been authorized pursuant to the laws of the Commonwealth.

The proceeds of the sale of the Bonds will be used to develop ReElement’s Kentucky Lithium refining facility which is being designed with an initial capacity to produce 15,000 metric ton per annum of battery-grade lithium carbonate and/or lithium hydroxide.

The Bonds are being offered and sold only to a limited number of “Qualified Institutional Buyers” within the meaning of Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”), or “Accredited Investors” within the meaning of Regulation D promulgated under the 1933 Act.

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 9A. Controls and Procedures