RANGE IMPACT, INC. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Certain statements contained in this Annual Report are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and are subject to the “safe harbor” created by these sections. Future filings with the SEC, future press releases and future oral or written statements made by us or with our approval, which are not statements of historical fact, may also contain forward-looking statements. Because such statements include risks and uncertainties, many of which are beyond our control, actual results may differ materially from those expressed or implied by such forward-looking statements. Some of the factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements can be found under the caption “Risk Factors” in Part I, Item 1A, and elsewhere in this Annual Report. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made. The following discussion should be read in conjunction with the financial statements and the accompanying notes for the periods ended December 31, 2024 and December 31, 2023 appearing elsewhere in this Annual Report. Our actual results could differ materially from those expressed or implied in any forward-looking statements as a result of various factors, including those set forth under the caption “Risk Factors” in Part I, Item 1A. Items Affecting Comparability of Financial Results During the year ended December 31, 2023, the Company purchased Collins Building, as described in Note 2 to the Consolidated Financial Statements. During the year ended December 31, 2024, the Company sold substantially all of the assets of Collins Building to its previous owner in exchange for the cancellation of all remaining debt owed to him, as described in more detail in Note 2. During the third quarter of 2024, the Company sold its wholly-owned subsidiary Graphium Biosciences, Inc. In accordance with GAAP, assets and liabilities of discontinued operations are presented separately in the Consolidated Balance Sheets, and results of discontinued operations are reported as a separate component of consolidated net loss in the Consolidated Statements of Operations, for all periods presented, resulting in changes to the presentation of certain prior period amounts. Plan of Operations We are a public company dedicated to improving the health and wellness of people and the planet through a novel and innovative approach to impact investing. We own and operate several complementary operating businesses focused on developing long-term solutions to environmental, social, and health challenges, with a particular focus on acquiring, reclaiming and repurposing mine sites and other undervalued land in economically disadvantaged communities throughout Appalachia. We take an opportunistic approach to impact investing by leveraging our competitive advantages and looking at solving old problems in new ways. We seek to thoughtfully allocate our capital into strategic opportunities that are expected to make a positive impact on the people-planet ecosystem and generate strong investment returns for our shareholders. 25 Critical Accounting Policies Preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make certain estimates and assumptions which affect amounts reported in our consolidated financial statements. On an ongoing basis, we evaluate the accounting policies and estimates that are used to prepare financial statements. Management has made their best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. We do not believe that there is great likelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Use of Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Business Combinations Business combinations are accounted for using the purchase method of accounting under ASC 805, “Business Combinations.” This method requires the Company to record assets and liabilities of the businesses acquired at their estimated fair values as of the acquisition date. Any excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. Determining the fair value requires management to make estimates and assumptions including discount rates, rates of return on assets, and long-term sales growth rates. Bargain purchases occur if the acquisition date amounts of the identifiable net assets acquired, excluding goodwill, exceed the sum of (1) the value of consideration transferred, (2) the value of any noncontrolling interest in the acquiree, and (3) the fair value of any previously held equity interest in the acquiree. ASC 805 requires the recognition of a gain for a bargain purchase. The FASB believes that a bargain purchase represents an economic gain, which should be immediately recognized by the acquirer in earnings. When a bargain purchase gain is recognized in a business combination, no goodwill is recognized. Goodwill As referenced by ASC 350 “Intangibles- Goodwill and other” (“ASC 350”), management performs its annual test for goodwill at least annually or more frequently, if impairment indicators arise. At December 31, 2024, it was determined that the goodwill was fully impaired and resulted in a charge against earnings in the full amount of $751,421. Stock-Based Compensation The Company periodically issues stock options and restricted stock awards to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for such grants issued and vesting based on ASC 718, Compensation-Stock Compensation whereby the value of the award is measured on the date of grant and recognized for employees as compensation expense on the straight-line basis over the vesting period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services. Revenue Recognition The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers”. The core principle of the revenue standard is that a company should recognize revenue by analyzing the following five steps; (1) identify the contract with the customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) each performance obligation is satisfied. The Company primarily invoices customers and recognizes revenue on a periodic basis for equipment and labor hours provided to a customer on a particular job based on an agreed-upon hourly rate sheet or a fixed amount for a project. The Company also invoices customers and recognizes revenue for equipment mobilization fees and materials and supplies required to complete a project. The Company invoices for the sales of chemicals and recognizes revenue when the products are delivered to the customer’s designated site. Costs for equipment, labor and chemicals are generally expensed as incurred since the projects are generally short-term and not subject to a contract. The Company also invoices customers for the provision of environmental security services on an agreed-upon hourly rate for each project. The Company recognizes revenue from contracts for financial reporting purposes over time. Progress toward completion of the Company’s contracts is measured by the percentage of cost incurred to date compared to estimated total costs for each contract. This method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change significantly within the near term. 26 Income Taxes In accordance with ASC 740, “Income Taxes” (“ASC 740”), we account for income taxes under the asset and liability method, whereby deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities and are measured using the currently enacted tax rates. Specifically, we measure gross deferred tax assets for deductible temporary differences and carryforwards, such as operating losses and tax credits, using the applicable enacted tax rates and apply the more likely than not measurement criterion. Further, at each interim reporting period, we estimate an effective income tax rate that is expected to be applicable for the full year. Significant judgment is involved regarding the application of income tax laws and regulations and when projecting the jurisdictional mix of income. Additionally, interpretation of tax laws, court decisions or other guidance provided by taxing authorities influences our estimate of the effective Recent Accounting Pronouncements Please refer to Footnote 1 of the accompanying financial statements for management’s discussion of recent accounting pronouncements. Results of Operations Years Ended December 31, 2024 and December 31, 2023 The following table sets forth our results of operations for the years ended December 31, 2024 and 2023. Year Ended December 31, 2024 Year Ended December 31, 2023 Revenues $ 9,011,081 $ 19,346,306 Cost of services 9,895,209 13,111,497 Gross profit/(loss) (884,128 ) 6,234,809 Operating Expenses: General and administrative 2,655,970 4,021,556 Total operating expenses 2,655,970 4,021,556 Income (loss) from operations (3,540,098 ) 2,213,253 Other Income/(Expense): Gain on bargain purchase - 1,875,150 Other income 63,170 - Goodwill impairment (751,421 ) - Fixed asset impairment (738,913 ) - Loss on sale of fixed assets (3,677,500 ) - Interest expense (617,422 ) (505,917 ) Interest income 7,405 7,458 Total other income (expense) (5,714,681 ) 1,376,691 Income (loss) from continuing operations before income tax (9,254,779 ) 3,589,944 Income tax expense attributable to continuing operations (77,368 ) - Income (loss) from continuing operations (9,332,147 ) 3,589,944 Loss from discontinued operations (465,936 ) (458,889 ) Net income (loss) $ (9,798,083 ) $ 3,131,055 The Company’s revenue during the year ended December 31, 2024 was $9,011,081 compared to $19,346,306 for the year ended December 31, 2023 (a decrease of $10,335,225). During the year ended December 31, 2024, the gross loss was $(884,128) compared to gross profit of $6,234,809 during the year ended December 31, 2023 (a decrease of $7,118,937). The significant reduction in revenue is attributable to a decrease in revenues at Range Natural of $8,230,685 in 2024 compared to 2023 due to reduced mining activity resulting from the failure of the Company’s mining subcontractor that reduced the amount of coal mined and sold during the year and that Range Environmental had a large non-recurring project in 2023 that contributed $2,902,088 in revenue. During the year ended December 31, 2024, we incurred general and administrative expenses in the aggregate amount of $2,655,970 compared to $4,021,556 incurred during the year ended December 31, 2023 (a decrease of $1,365,586). General and administrative expenses generally include corporate overhead, salaries and other compensation costs, financial and administrative contracted services, consulting costs and travel expenses. The largest decreases related to (i) the general and administrative expenses incurred by our Range Reclaim segment (not including Range Natural) of $1,072,984 during the year ended December 31, 2024, compared to $1,646,627 incurred during the year ended December 31, 2023 (a decrease of $573,643), which was due to the sale of Collins Building property and equipment in 2024 and significantly decreased activity in the Range Reclaim segment during the year ended December 31, 2024; and (ii) the general and administrative expenses recorded for the Corporate segment decreased $621,005 during the year ended December 31, 2024 compared to the year ended December 31, 2023, which was primarily due to a decrease of $321,070 in stock option compensation, a $102,601 decrease in insurance and employee benefit costs, and a decrease of $94,676 in legal and accounting fees. During the year ended December 31, 2024, we incurred research and development expenses of $465,936 compared to $458,889 incurred during the year ended December 31, 2023 (an increase of $7,047). All of these expenses were incurred by the Company’s (discontinued) Drug Development business segment. The Company’s research and development personnel expenses were $295,300 during the year ended December 31, 2024, compared to $274,912 for the year ended December 31, 2023 (an increase of $20,388). These expenses are presented as discontinued operations. 27 During the year ended December 31, 2024, the Company recorded other expense of $(5,714,681), consisting of a loss on sale of assets of $3,677,500 in connection with the disposition of the Collins Building assets, goodwill impairment of $751,421, fixed asset impairment of $738,913 and interest expense of $617,422, offset by other income of $63,170 and interest income of $7,405, compared to other income of $1,376,691 during the year ended December 31, 2023, consisting of a gain on bargain purchase of $1,875,150 and interest income of $7,458, offset by interest expense of $505,917 during the year ended December 31, 2023 (a decrease of $7,091,372). $3,043,799 of the loss on sale of assets in the year ended December 31, 2024 was the same group of assets which recorded a $1,875,150 gain on bargain purchase in year ended December 31, 2023. Based on the overall condition of the resale market for large scale equipment in 2024, the Company incurred larger-than-expected losses on disposal of its equipment. These market conditions also contributed to management’s assessment and impairment of a group of assets that were held for sale as of December 31, 2024. Based on the past two years of accumulated losses, changes in customers and workstreams coupled with issues hiring and retaining qualified operations management and crews at Range Environmental, management’s analysis supports a full impairment of the goodwill that was associated with the 2022 purchase of Range Environmental in the amount of $751,421. The net loss during the year ended December 31, 2024 was $(9,798,083) compared to net income of $3,131,055 for the year ended December 31, 2023 (a worsening of $12,929,138). The decline in year over year net income is primarily due to the year over year decrease in gross profit of $7,118,937 which was primarily derived from losses incurred in the operations of the Range Reclaim segment coupled with the loss on sale of assets, goodwill impairment, and fixed asset impairment (combined $5,167,834). Liquidity and Capital Resources As of December 31, 2024, we had an accumulated deficit of $56,879,882. As of December 31, 2024, we had total current assets of $4,293,046, primarily comprised of cash of $167,286, accounts receivable of $3,209,070, and equipment held for sale of $733,613. As of December 31, 2024, we had total current liabilities of $3,543,609, primarily consisting of the current portion of long-term debt in the amount of $789,719, accounts payable and accrued expenses of $753,890, and lines of credit of $2,000,000. As a result, on December 31, 2024, the Company had working capital of $749,437. At December 31, 2023, the Company had working capital of $753,756. As of December 31, 2024, the Company had long-term assets of $1,899,669, comprised of net equipment assets. As of December 31, 2024, the Company had long-term liabilities of $1,814,701, comprised of long-term debt, net of current portion. Sources of Capital Based on the Company’s current corporate strategy, its net operating losses for the 12 months following December 31, 2024 are expected to be approximately $500,000, which is comprised of general operating expenses partially offset by revenue generated by the Range Reclaim and Range Security business segments. Based on the Company’s cash balance of $167,286, and its estimated net operating losses of approximately $500,000 for the 12-month period ending December 31, 2025, the Company estimates that it may not have sufficient funds to operate its business over the next 12 months. The Company is actively managing its working capital to generate additional cash flow and is actively seeking additional financing to fund its currently estimated level of operations. Our estimated total expenditures for the 12-month period ending December 31, 2025 could increase if we encounter unanticipated lower revenues and higher expenses in connection with operating our business as presently planned. In addition, our estimates of the amount of cash necessary to fund our business may prove to be too low, and we could spend our available financial resources much faster than we currently expect. If we cannot raise the capital necessary to continue to develop our business, we will be forced to delay, scale back or eliminate some or all of our proposed operations. If any of these were to occur, there is a substantial risk that our business would fail. Since inception, we have primarily funded our operations through equity and debt financings. Until such time as our operating businesses are consistently cash flow positive, we expect to continue funding our operations, at least in part, through equity and debt financings. However, sources of additional funds may not be available when needed, on acceptable terms, or at all. If we issue equity or convertible debt securities to raise additional funds or to fund, in whole or in part, acquisitions in furtherance of our business strategy, our existing stockholders may experience substantial dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we incur additional debt, it may increase our leverage relative to our earnings or to our equity capitalization, requiring us to pay additional interest expenses. Obtaining commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments. Moreover, regardless of the manner in which we seek to raise capital, we may incur substantial costs in those pursuits, including investment banking fees, legal fees, accounting fees, and other related costs. 28 Net Cash Provided By (Used in) Operating Activities For the year ended December 31, 2024, net cash used in operating activities was $1,591,426 compared to net cash provided by operating activities of $438,637 for the year ended December 31, 2023 (a decrease of $2,030,063). This decline was primarily attributable to (i) our net loss of $9,798,083 for the year ended December 31, 2024 compared to a net profit of $3,131,055 for the year ended December 31, 2023, (ii) a decrease in accounts receivable (including unbilled receivables) of $3,976,341, (iii) an increase in the cash adjustment for asset disposals of $3,677,400, (iv) an increase in the cash adjustment for goodwill impairment of $751,421, (v) an increase in the cash adjustment for equipment impairment of $738,913, and (vi) depreciation expense of $1,868,997 offset by a decrease in accounts payable of $3,157,453. Net cash provided by operating activities during the year ended December 31, 2023, consisted primarily of a net profit of $3,131,055, an increase in accounts payable of $3,480,206 and depreciation of $1,781,573 offset by an increase in accounts receivable of $6,204,026 and stock-based compensation of $386,530. Net Cash Used in Investing Activities For the year ended December 31, 2024, net cash provided by investing activities was $430,100, which consisted of $270,000 received from sale of equipment, $160,000 in insurance policy proceeds from a casualty loss, and $100 received from the sale of the Graphium subsidiary. For the year ended December 31, 2023, net cash used in investing activities was $7,162,811, which consisted primarily of $4,035,250 of long-term debt issued and $1,000,000 paid for the Collins Building acquisition, $1,118,664 for equipment purchased primarily by the Range Reclaim segment, and $1,008,897 for land purchases by the Range Land segment. Net Cash Provided By Financing Activities For the year ended December 31, 2024, net cash used in financing activities was $848,188 compared to net cash provided by financing activities of $8,458,605 for the year ended December 31, 2023. Net cash used in financing activities for the year ended December 31, 2024 consisted of $1,848,188 of long-term equipment debt and bank credit line pay-downs offset by $1,000,000 received from the issuance of common stock. Net cash provided by financing activities for the year ended December 31, 2023 consisted of $3,110,000 received from the issuance of common stock and warrants, proceeds of $4,035,250 from long-term debt issued for the Collins Building acquisition and proceeds of $2,400,000 from lines of credit, offset by the repayment of long-term debt of $1,650,659. Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to stockholders. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable. Item 8. Financial Statements and Supplementary Data The financial statements required by this item are set forth at the end of this Annual Report beginning on page F-1 and are incorporated herein by reference. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. 29