What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-06-02 compared with 2023-02-10 · 105 added, 37 removed, 42 unchanged (77% of the section changed)

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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this report .

The management’s discussion, analysis of financial condition, and results of operations should be read in conjunction with our financial statements and notes thereto contained elsewhere in this annual report.

Our primary source of revenue is the sale of metallurgical coal and coal used in pulverized coal injection (PCI).

Both metallurgical and PCI coal is an essential building block in the steel manufacturing process.

Our primary source of revenue through 2024 has been the sale of metallurgical coal and coal used in pulverized coal injection (PCI).

Both metallurgical and PCI coal are essential building blocks in the steel manufacturing process.

The overall outlook of the metallurgical coal business is dependent on a variety of factors such as pricing, regulatory uncertainties and global economic conditions.

4 unchanged sentences

Year Ended December 31, 2024 compared to Year Ended December 31, 2023.

Revenues for the year ended December 31, 2021 were $7,755,306 and 2020 were $1,059,691, 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.

Contribution of revenues:

Year ended 2021

For the year ended 2021, tons sold to steel making end users amounted to 60,512 with a realized sales price of $75.39.

For the year ended 2021, tons sold to industrial and specialty end users amounted to 28,333,408 with a realized sales price of $112.46.For the year ended 2021, 87% of coal sales revenue was contributed by Perry County and 13% of coal sales revenue was contributed by McCoy.

The reason for the difference in sales contribution is that Perry County commenced operations post Covid-19 lockdown before McCoy did.

Year ended 2020

For the year ended 2020, tons sold to steel making end users amounted to 6,569 with a realized sales price of $59.09.

For the year ended 2020, tons sold to industrial and utility end users amounted to 1,099.98 with a realized sales price of $58.24.

For the year ended 2020, 88% of coal sales revenue was contributed by McCoy and 12% of coal sales revenue was contributed by Perry.

The reason for the difference in sales contribution is that Perry County shut down first due to Covid-19 lockdown.

Total Operating Expenses for the year ended December 31, 2021 were $36,088,714 and 2020 were $17,507,056, 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.

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, 2021 were $(232,994) and 2020 were $20,537, respectively.

Financial Condition.

Total Assets as of December 31, 2021 amounted to $42,872,702 and 2020 amounted to $38,415,395, respectively.

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

Total Liabilities as of December 31, 2021 amounted to $45,218,110 and 2020 amounted to $58,420,895, respectively.

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

For the Years Ended

$ (12,596,163 )

Metal recovery and sales

Service fee revenue

Royalty income

Total revenue

(12,851,165 )

Operating expenses (income)

Coal production and holdings costs

Amortization of mining rights

General and administrative

Professional fees

Litigation expense

(10,827,268 )

Production taxes and royalties

Gain on sale of equipment

Total operating expenses

(16,137,305 )

Net loss from operations

(33,089,062 )

(36,375,202 )

Other income (expense)

Earnings from equity method investees

Other income and (expense)

Interest income

Interest expense

Total other income (expenses), net

(40,196,740 )

(38,724,963 )

Non-controlling interest

Net loss attributable to AREC shareholders

$ (40,108,926 )

$ (38,527,408 )

$ (1,581,518 )

The following table summarizes the changes in revenue generating operations:

For the Years Ended

(12,596,163 )

Metal recovery and sales

Service fee revenue

Royalty income

Total revenue

(12,851,165 )

Revenues for the 2024 and 2023 were $383,234 and $13,234,399, respectively.

The primary drivers of the decrease were reductions in coal sales and royalty income.

Declines were due to adverse market conditions and unfavorable pricing that led to our decision to suspend coal production activities beginning in 2023.

Our coal production businesses are located in the United States with our operations located in the Central Appalachian basin of eastern Kentucky and West Virgina.

Our coal sales for 2024 and 2023 were all classified as metallurgical coal (“Met”) used for steel making.

For the year ended 2024, the Company had de minimis tons of coal sold to steel making end users.

For the year ended 2023, tons sold to steel making end users amounted to 67,373 tons with a realized sales price of $180.

The following table summarizes the changes in operating expenses (income):

For the Years Ended

Operating expenses (income)

Coal production and holdings costs

Amortization of mining rights

General and administrative

Professional fees

Litigation expense

(10,827,268 )

Production taxes and royalties

Gain on sale of equipment

Total operating expenses

Total operating expenses decreased in 2024 as compared to 2023.

This decrease was primarily attributable to decreases in coal production and holdings costs, litigation expense, production taxes and royalties and development.

These decreases were partially offset by increases in depreciation, amortization of mining, general and administrative and professional.

General and administrative expenses primarily consist of contract labor, payroll, facility maintenance, stock-based compensation to employees and consultants, insurance and other routine operating costs.

The decrease in our coal production and holding costs is aligned with the suspension of our coal production activities beginning in 2023.

The decrease in litigation expense is because in 2023, American Infrastructure recognized charges for certain litigation matters where the potential loss was assessed as probable in that year.

The increase in general and administrative expenses is primarily attributable to the shift in our business from coal production to other activities including the development of RLMT technology for refining rare earth and battery elements.

The following table summarizes the changes in other income (expense):

For the Years Ended

Other income (expense)

Earnings from equity method investees

Other income and (expense)

Interest income

Interest expense

Total other income (expenses), net

$ (7,107,678 )

$ (2,349,761 )

The increase in net other expense is primarily attributable to the net increase in interest expense driven by the WCC bonds being outstanding for the full twelve months of 2024 compared to approximately seven months in 2023 and the KCC bonds that were issued in March 2024.

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.

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 2021 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.

Our primary sources of liquidity are derived from existing unrestricted cash, reimbursements from bond funds and other debt and capital proceeds.

With the suspension of our coal production activities beginning in 2023 and the development stage of our new ReElement and Electrified Materials businesses through 2024, our sources of revenue in 2024 were primarily limited to royalty income and coal processing fees.

We anticipate our ReElement and Electrified Materials new businesses to achieve increasing revenues in 2025;

however, we will continue to require cash flows from financing activities to support operations and the continued development of our new business models.

As of December 31, 2024, the company has a cash balance of $604,485 and a working deficit of $73,477,808.

We expect to fund our liquidity requirements over the next 12 months primarily with cash on hand and additional debt and equity financing transactions.

If future cash flows are insufficient to meet our liquidity needs or capital requirements, we may be required to rationalize our expenditures or slow down efforts to further develop our new business models.

We do not have any credit lines currently available to fund our liquidity requirements.

Maintaining future liquidity is subject to significant uncertainties primarily related to the generation of revenues from our new business models at levels that surpass breakeven and the ability to obtain additional debt and equity financing.

Year Ended December 31, 2024 compared to Year Ended December 31, 2023

Years Ended December 31,

Consolidated statement of cash flow data:

Cash used in operating activities

$ (22,225,352 )

$ (20,100,929 )

Cash provided by (used in) investing activities

Cash provided by financing activities

Net change in cash and restricted cash

$ 124,492,106

The $2,124,423 increase in cash used for operating activities was primarily due to a $1,471,777 increase in net loss and a $3,654,193 decrease in cash flow provided by changes in working capital offset by an increase of $3,001,547 in non-cash charges.

Cash provided by investing activities during 2024 was $55,976 compared to cash used in investing activities of $1,127,427 in 2023.

The change was primarily due to purchases of property and equipment, net of capitalized interest income and (expense) of $1,059,062 offset proceeds from sales of equipment of $400,000 and proceeds from short-term investments of $715,038.

Cash provided by financing activities during 2024 was $146,661,482 compared to $45,612,289 in 2023.

The change was due to proceeds from tax exempt bonds, net of $149,719,203, proceeds from convertible promissory note of $1,624,860, proceeds from exercise of stock option of $156,900, proceeds from warrant conversions of $32,339, proceeds received from other financing obligations of $2,493,819 offset by repayments of other financing obligations of $7,365,639.

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/A

Item 7. Management’s Discussion and Analysis