Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: June 30, 2023

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

For the transition period from _______ to _______

Commission File Number: 000-55456

American Resources Corporation

(Exact name of registrant as specified in its charter)

Florida

46-3914127

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12115 Visionary Way Fishers, IN 46038

(Address and Zip Code of principal executive offices)

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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common, $0.0001 Par Value	AREC	NASDAQ Capital Market
Warrant	ARECW	NASDAQ Capital Market

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

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

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

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

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

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

As of August 14, 2023, the registrant had 78,213,454 shares of Class A common stock issued and outstanding.

AMERICAN RESOURCES CORPORATION

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Interim Consolidated Financial Statements

	Consolidated Condensed Balance Sheets as of June 30, 2023 and December 31, 2022 (Unaudited)		3

	Consolidated Condensed Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)		4

	Consolidated Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Six Months ended June 30, 2023 and 2022 (unaudited)		5-6

	Consolidated Condensed Statements of Cash Flows for the Six Months ended June 30, 2023 and 2022 (Unaudited)		7

	Notes to Unaudited Consolidated Condensed Financial Statements		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		28

Item 4.	Controls and Procedures		28

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		29

Item 1A.	Risk Factors		29

Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds		29

Item 3.	Defaults upon Senior Securities		29

Item 4.	Mine Safety Disclosures		29

Item 5.	Other Information		29

Item 6.	Exhibits		30

SIGNATURES			32

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AMERICAN RESOURCES CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

UNAUDITED

	June 30, 2023			December 31, 2022
ASSETS

CURRENT ASSETS
Cash	$	2,874,557		$	8,868,566
Receivables		995,230			660,755
Inventory		711,226			446,690
Prepaid fees		1,806,558			786,576
Total Current Assets		6,387,571			10,762,587

OTHER ASSETS
Cash - restricted		48,658,373			2,122,263
Property and Equipment, Net		9,027,465			9,113,722
Right of use assets, net		16,848,225			13,033,889
Investment in llc – Related Party		19,058,593			20,784,866
Notes receivable		99,022			99,022
Total Other Assets		93,691,678			45,153,762

TOTAL ASSETS	$	100,079,249		$	55,916,349

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Trade payable	$	4,738,430		$	4,916,243
Non-Trade payables		3,023,717			2,524,243
Accounts payable – related party		2,562,016			4,295,232
Accrued interest		142,882			106,886
Current portion of debt		818,686			1,917,506
Current portion of convertible debt		-			9,787,423
Current portion of lease liabilities, net		4,919,257			3,889,235
Total Current Liabilities		16,204,988			27,436,768

OTHER LIABILITIES
Remediation liability		20,792,216			20,295,634
Lease liabilities, net		8,870,661			7,899,251
Bonds Payable, net		43,475,888			-
Total Other Liabilities		73,138,765			28,682,904

Total Liabilities		89,343,753			55,631,653

STOCKHOLDERS’ EQUITY (DEFICIT)
AREC - Class A Common stock: $0.0001 par value; 230,000,000 shares authorized, 76,197,850 and 66,777,620 shares issued and outstanding		7,622			6,680
Additional paid-in capital		178,056,886			167,517,259
Accumulated deficit		(167,329,012	)		(167,239,243	)
Total stockholders’ Equity (Deficit)		10,735,496			284,696
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	100,079,249		$	55,916,349

The accompanying footnotes are integral to the unaudited consolidated financial statements

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AMERICAN RESOURCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

UNAUDITED

	For the three months ended June 30, 2023			For the three months ended June 30, 2022			For the six months ended June 30, 2023			For the six months ended June 30, 2022
Coal Sales	$	1,675,816		$	15,969,787		$	10,399,001		$	25,001,047
Metal Aggregating, Processing and Sales		33,816			3,292			54,425			40,519
Royalty Income		271,056			226,125			395,718			238,262

Total Revenue		1,980,688			16,199,204			10,849,144			25,279,828

Cost of Coal Sales and Processing		(3,798,012	)		(5,569,133	)		(6,503,830	)		(8,459,992	)
Accretion Expense		(248,291	)		(363,820	)		(496,582	)		(631,442	)
Depreciation		(8,482	)		(630,341	)		(21,818	)		(1,256,383	)
Amortization of Mining Rights		(311,685	)		(311,685	)		(617,544	)		(615,079	)
General and Administrative		(1,134,616	)		(903,046	)		(2,456,084	)		(1,923,861	)
Professional Fees		(346,477	)		(235,487	)		(639,732	)		(586,425	)
Production Taxes and Royalties		(496,824	)		(786,008	)		(1,478,461	)		(1,605,485	)
Development Costs		(2,666,846	)		(11,532,406	)		(8,300,754	)		(18,316,594	)

Total Operating Expenses		(9,011,233	)		(20,331,926	)		(20,514,805	)		(33,395,261	)

Net Loss from Operations		(7,030,545	)		(4,132,722	)		(9,665,661	)		(8,115,433	)

Other Income (loss)		260,000			76,000			353,000			158,156
Unrealized loss on trading securities		-			(7,602	)		-			(7,602	)
Gain on cancelation of debt		-			1,891,848			-			3,413,152
Gain on Sales of Assets		5,936,892			-			5,936,892			-
Interest Income		1,553			3,282			18,764			13,327
Interest expense		(167,825	)		(274,640	)		(743,789	)		(658,336	)
Total Other income (expense)		6,030,620			1,688,888			5,564,867			2,918,697

Net Income (Loss)	$	(999,925	)	$	(2,443,834	)	$	(4,100,794	)	$	(5,196,736	)

Net loss per common share - basic and diluted	$	(0.01	)	$	(0.04	)	$	(0.05	)	$	(0.08	)

Weighted average common shares outstanding		76,197,850			66,377,788			74,584,440			65,846,220

The accompanying footnotes are integral to the unaudited consolidated financial statements

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AMERICAN RESOURCES CORPORATION

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

FOR THE PERIOD FROM JANUARY 1, 2022 THROUGH JUNE 30, 2022 AND JANUARY 1, 2023 THROUGH JUNE 30, 2023

UNAUDITED

Statement of Stockholders’ Deficit

June 30, 2022

	Par value Shares		0.0001 Amount		APIC			Accumulated Deficit			Total

Balance December 31, 2021		65,084,992	$	6,508	$	163,441,655		$	(165,793,571	)	$	(2,345,408	)

Issuance of common shares for Warrant Conversion		488,594		50		665,341			-			665,391

Issuance of common shares for Conversion of debt and interest		582,885		58		622,152			-			622,210

Amortization of debt discount		-		-		(40,655	)		-			(40,655	)

Stock compensation - options		-		-		199,843			-			199,843

Net Loss		-		-					(2,752,902	)		(2,752,902	)

Balance March 31, 2022		66,156,471		6,616		164,888,336			(168,538,589	)		(3,651,521	)

Issuance of common shares for Conversion of debt and interest		451,250		45		1,199,955			-			1,200,000

Issuance of common shares for Warrant Conversion		5,364		-		8,064			-			8,064

Stock compensation - options		-		-		190,024			-			190,024

Net loss		-		-		-			(2,443,834	)		(2,443,834	)

Balance June 30, 2022		66,613,085		6,661		166,286,379			(170,969,757	)		(4,697,267	)

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Statement of Stockholders’ Deficit

June 30, 2023

	Par value Shares		0.0001 Amount		APIC		Accumulated Deficit			Total

Balance December 31, 2022		66,777,620	$	6,680	$	167,517,259	$	(167,239,243	)	$	284,696

Issuance of common shares for Warrant Conversion		9,420,230		942		9,786,481		-			9,787,423

Stock compensation - options		-		-		376,573		-			376,573

Net Loss		-		-				(3,100,869	)		(3,100,869	)

Balance March 31, 2023		76,197,850		7,622		177,680,313		(170,340,112	)		7,347,823

Recapture expenses for bond issuance		-		-		-		4,011,025			4,011,025

Stock compensation - options		-		-		376,573		-			376,573

Net loss		-		-		-		(999,925	)		(999,925	)

Balance June 30, 2023		76,197,850		7,622		178,056,886		(167,329,012	)		10,735,496

The accompanying footnotes are integral to the unaudited consolidated financial statements

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AMERICAN RESOURCES CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

UNAUDITED

	For the six months ended			For the six months ended
	June 30, 2023			June 30, 2022
Cash Flows from Operating activities:
Net loss	$	(4,100,794	)	$	(5,196,736	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on debt forgiveness		-			(3,413,152	)
Depreciation expense		21,818			1,256,383
Amortization of mining rights		617,544			615,079
Accretion expense		496,582			631,442
Amortization expense of right to use assets		(695,933	)		(15,021	)
Amortization of issuance costs and debt discount		-			-
Options expense		753,146			389,867
Warrant expense		-			673,455
Issuance of common shares for service		-			-

Change in current assets and liabilities:
Accounts receivable		(334,475	)		(2,179,134	)
Inventory		(264,536	)		-
Prepaid expenses and other assets		(1,019,982	)		(191,448	)
Accounts payable		(321,661	)		(229,526	)
Accrued interest		(35,996	)		(299,700	)
Accounts payable - related party		(1,733,216	)		7,601
Net cash (used in)/generated from operations		(5,902,189	)		(7,950,890	)

Cash Flows from Investing activities:
Cash used in investments in LLCs		1,726,273			(742,398	)
Cash invested in note receivable		-			(335,000	)
Cash received (paid) for PPE, net		(553,105	)		147,824
Net cash (used in)/generated from investing activities		1,173,168			(929,574	)

Cash Flows from Financing activities:
Principal payments on finance lease		(1,116,969	)		(99,204	)
Principal payments on debt		(1,098,822	)		(1,276,691	)
Proceeds from bonds		43,475,888			-
Proceeds from the bond lookback		4,011,025			-
Proceeds from debt		-			2,563,000
Proceeds from warrant conversions		-			-
Net cash (used in)/generated from financing activities		45,271,122			1,187,105

Increase(decrease) in cash and restricted cash		40,542,101			(7,693,359	)

Cash and restricted cash, beginning of period		10,990,829			12,588,113

Cash and restricted cash, end of period	$	51,532,930		$	4,894,754

Supplemental Information
Cash paid for interest	$	-		$	64,094
Conversion of debt and interest to common shares	$	-		$	1,822,210
Acquisition of right of use assets for lease obligations	$	3,814,336		$	1,117,219

The accompanying footnotes are integral to the unaudited consolidated financial statements

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AMERICAN RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

American Resources Corporation (ARC or the Company) operates through subsidiaries that were acquired in 2020, 2019, 2018, 2016 and 2015 for the purpose of acquiring, rehabilitating and operating various natural resource assets including coal, oil and natural gas.

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

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

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

Interim Financial Information:

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. In the opinion of management, these interim unaudited Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair presentation of the results for the periods presented. Results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or any other period. These financial statements should be read in conjunction with the Company’s 2022 audited financial statements and notes thereto which were filed on Form 10-K on March 31, 2023.

Convertible Preferred Securities:

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

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

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

Cash, Cash Equivalents and Restricted Cash:

The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that agrees to the total of those amounts as presented in the consolidated statement of cash flows for the six months ended June 30, 2023 and June 30, 2022.

	June 30, 2023		June 30, 2022
Cash	$	2,874,557	$	3,807,783
Restricted Cash		48,658,373		1,086,971
Total cash and restricted cash presented in the consolidated statement of cash flows	$	51,532,930	$	4,894,754

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Asset Retirement Obligations (ARO) – Reclamation:

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

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

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

The table below reflects the changes to our ARO:

Balance at December 31, 2022	$	20,295,634
Accretion – six months June 30, 2023		496,583
Reclamation work – six months June 30, 2023		-
Balance at June 30, 2023	$	20,792,216

Balance at December 31, 2021	$	18,951,587
Accretion – six months Jun 30, 2022		631,442
Reclamation work – six months June 30, 2022		-
Balance at June 30, 2022	$	19,583,029

Allowance For Doubtful Accounts:

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

Allowance for trade receivables as of June 30, 2023 and December 31, 2022 amounted to $0, for both periods. Allowance for other accounts receivables as of June 30, 2023 and December 31, 2022 amounted to $1,888,070 and $1,744,570, respectively.

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of June 30, 2023 and December 31, 2022.

Prepaid Fees and Advance Royalties:

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

Inventory:

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

Reclassifications:

Reclassifications of prior periods have been made to conform with current year presentation.

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NOTE 2 - PROPERTY AND EQUIPMENT

At June 30, 2023 and December 31, 2022, property and equipment were comprised of the following:

	June 30, 2023			December 31, 2022
Processing and rail facility	$	553,103		$	-
Underground equipment		-			-
Surface equipment		-			-
Coal refuse storage		12,134,192			12,134,192
Mine Development		561,575			561,575
Land		1,617,435			1,617,435
Less: Accumulated depreciation		(5,838,840	)		(5,199,478	)

Total Property and Equipment, Net	$	9,027,465		$	9,113,724

Depreciation expense amounted to $320,167 and $630,341 for the three-month periods June 30, 2023 and June 30, 2022, respectively. Depreciation expense amounted to $639,362 and $1,256,383 for the six-month periods June 30, 2023 and June 30, 2022, respectively.

The estimated useful lives are as follows:

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

NOTE 3 - NOTES PAYABLE

During the three-month period ended June 30, 2023, principal reductions on long term debt totaled $21,045, primarily due to payments of the Volvo loan. During the three-month period ended March 31, 2023, increases to long term debt totaled $0. On January 31, 2023, the remaining amounts of the convertible notes in the amount of $9,891,241 was converted into 9,420,230 common shares of the Company. Extinguishing all future liabilities under the convertible note.

During the three-month period ended June 30, 2022, principal reductions on long term debt totaled $3,389,301, primarily due to the repayment of PPP loan and converting to common shares. During the three-month period ended June 30, 2022, increases to long term debt totaled $2,843,635 due mostly to equipment financing for reElement and a mine development coal for Carnegie 2 expansion.

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NOTE 4 – RIGHT OF USE ASSETS AND LEASES

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

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

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

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

On August 17, 2022, 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.

On November 8, 2022, American Carbon Corp entered into a Financial Lease for equipment at 2069 Highway

At June 30, 2023, right of use assets and liabilities were comprised of the following:

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	June 30, 2023				June 30, 2022
	Asset		Liability		Asset		Liability
Operating Leases		591,967		592,745		682,551		676,347

Finance Leases		16,235,498		13,197,171		1,117,219		997,239

NOTE 5 - RELATED PARTY TRANSACTIONS

Land Resources & Royalties

The Company leases property from Land Resources & Royalties (LRR), an entity controlled by certain members of the Company’s management who are also directors and shareholders. Until July 1, 2018, LRR was consolidated as a VIE resulting in transaction between the two companies to be eliminated upon consolidation. Upon deconsolidation, amounts paid and owed to LRR have been disclosed discreetly in the consolidated financial statements. For the three-month period ending June 30, 2023, royalty expense incurred with LRR amounted to $103,001 and amounts advanced from LRR amounted $0 and amounts repaid amounted to $0. As of June 30, 2023, total amounts owed LRR amounted to $336,331. For the three-month period ending June 30, 2022, royalty expense incurred with LRR amounted to $81,284 and amounts advanced from LRR amounted to $0 and amounts repaid to LRR amounted to $0. As of June 30, 2022, total amounts owed LRR amounted to $81,284.

Land Betterment Corp

On February 13, 2020, the Company entered into a Contract Services Agreement with Land Betterment Corporation, an entity controlled by certain members of the Company’s management who are also directors and shareholders. The contract terms state that service costs are passed through to the Company with a 10% mark-up and a 50% share of cost savings which includes payroll covering aforementioned members of the Company’s management. The services agreement covers all of the Company’s properties.

For the three-months ended June 30, 2023 amounts incurred under the agreement amounted to $1,148,385 and amounts paid totaled $1,383,360. For the three-months ended June 30, 2023, service charges covering members of the Company’s management amounted to $0.

For the six-months ended June 30, 2023 amounts incurred under the agreement amounted to $2,112,561 and amounts paid totaled $3,584,957. For the six-months ended June 30, 2023, service charges covering members of the Company’s management amounted to $0.

For the three-months ended June 30, 2022 amounts incurred under the agreement amounted to $2,103,400 and amounts paid totaled $1,062,198. For the three-months ended June 30, 2022, service charges covering members of the Company’s management amounted to $0.

For the six-months ended June 30, 2022 amounts incurred under the agreement amounted to $3,677,415 and amounts paid totaled $1,901,478. For the six-months ended June 30, 2022, service charges covering members of the Company’s management amounted to $0.

American Opportunity Venture, LLC

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

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American Opportunity Venture II, LLC

During March 2022, the Company invested $25,000 for 100% ownership and become the managing member of American Opportunity Venture II, LLC. (AOVII). As such, the investment in AOVII has been eliminated in the accompanying financial statements. As of June 30, 2023, AOVII has had no operational activity.

Novusterra, Inc.

During March 2022, the Company licensed certain technology to an unrelated entity, Novusterra, Inc. According to the commercial terms of the license, the Company is to receive 50% of future cash flows and 15,750,000 common shares of Novusterra, Inc. It has been determined that Novusterra is a variable interest entity and that the Company is not the primary beneficiary. As such, the investment in Novusterra will be accounted for using the equity method of accounting. As of June 30, 2023, Novusterra has had no operational activity.

Land Betterment Exchange (LBX)

The Company is the holder of 2,000,000 LBX Tokens with a par value of $250 for each token. The token issuance process is undertaken by a related party, Land Betterment, and is predicated on proactive environmental stewardship and regulatory bond releases. As of June 30, 2023, there is no market for the LBX Token and therefore no value has been assigned.

FUB Mineral LLC

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

NOTE 6 – EQUITY TRANSACTIONS

Employee stock compensation expense for the three-month period ending June 30, 2023 and 2022 amounted to $376,573 and $190,024 respectively.

Employee stock compensation expense for the six-month period ending June 30, 2023 and 2022 amounted to $753,146 and $389,868 respectively.

On May 1, 2023, the company issued employee stock options in the amount of 6,500 Class A Common Stock.

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

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

Warrant Exercises

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

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

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

New Warrant Issuances

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

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

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

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

	June 30, 2023
Expected Dividend Yield		0	%
Expected volatility		87.97	%
Risk-free rate		0.870	%
Expected life of warrants	1.592-6.60 years

Company Warrants:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Exercisable (Vested) – December 31,2021		8,401,221	$	1.135		2.152	$	7,453,214
Granted		4,601,250	$	3.531		4.814	$	69,700
Forfeited or Expired		-	$	-		-	$	-
Exercised		1,705,508	$	1.226		3.070	$	5,347,983
Outstanding – June 30, 2022		11,296,963	$	2.102		2.771	$	9,918,604
Exercisable (Vested) – June 30, 2022		11,296,963	$	2.102		2.771	$	9,918,604

Exercisable (Vested) – December 31, 2022		9,724,369	$	2.25		2.69	$	6,515,327
Granted		-	$	-		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - June 30, 2023		9,730,869	$	2.00		3.86	$	6,515,327
Exercisable (Vested) - June 30, 2023		9,730,869	$	2.00		3.86	$	6,515,327

Company Options:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding – December 31, 2021		2,159,269	$	1.606		5.660	$	1,919,129
Exercisable (Vested) – December 31, 2021		888,659	$	1.581		5.047	$	749,470
Granted		75,000	$	2.560		6.597	$	105,000
Forfeited or Expired		125,000	$	1.998		3.00	$	58,500
Exercised		25,000	$	1.640		6.562	$	41,500
Outstanding – June 30, 2022		2,084,269	$	1.551		5.369	$	2,363,549
Exercisable (Vested) – June 30, 2022		1,055,325	$	1.496		5.191	$	1,278,944

Outstanding – December 31, 2022		4,209,269	$	1.665		5.39	$	3,186,870
Exercisable (Vested) – December 31, 2022		3,159,268	$	1.517		4.91	$	3,141,183
Granted		6,500	$	1.14		4.00	$	4,810
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - June 30, 2023		4,215,769	$	1.517		4.64	$	3,145,993
Exercisable (Vested) - June 30, 2023		4,215,769	$	1.517		4.64	$	3,145,993

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NOTE 7 - CONTINGENCIES

In the course of normal operations, the Company is involved in various claims and litigation that management intends to defend. The range of loss, if any, from potential claims cannot be reasonably estimated. However, management believes the ultimate resolution of matters will not have a material adverse impact on the Company’s business or financial position. These claims include amounts assessed by the Kentucky Energy Cabinet totaling $1,141,000, the Company has accrued $1,432,077 as a payable to the Commonwealth of Kentucky including amounts owed to the Kentucky Energy Cabinet. Claims assessed by the Mine Health Safety Administration totaling $729,280 of which the Company has accrued $351,303 as a payable. During 2019, McCoy and Deane, received notice of intent to place liens for amounts owed on federal excise taxes. The amounts totaling $322,233, associated with the notices are included in the Company’s trade payables.

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

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

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

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

NOTE 8 - SUBSEQUENT EVENTS

On August 1, 2023 American Resources Corporation (“American Resources” or the “Company”), received a deposit (“Deane Deposit”) whereby entering the Company’s subsidiary, American Carbon Corporation (“American Carbon” or “ACC”), into a binding letter of intent (“Letter of Intent”) to sell certain assets associated to its Deane Mining complex to Integrity Carbon Solutions LLC (“Integrity” or “ICS”). Total consideration for the Company’s Deane Mining complex is approximately $20,600,000 of enterprise value which consists of: (i) the $200,000 Deane Deposit, (ii) $800,000 paid upon the consummation of the transaction as contemplated in the Letter of Intent (“Closing Payment”), (iii) $500,000 per calendar quarter for a period twenty-one consecutive calendar quarters following the Closing Payment (“Quarterly Payments”), and (iv) the assumption and replacement of approximately $9,100,000 of associated environmental reclamation bonds.

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.

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

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

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

Overview

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

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

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

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

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

McCoy Elkhorn Coal LLC

General:

Located primarily within Pike County, Kentucky, McCoy Elkhorn is currently comprised of two mines (Mine #15 and the Carnegie 1 Mine) in “hot idle” status, and one mine in development (Carnegie 2 Mine), two coal preparation facilities (Bevins #1 and Bevins #2), and other mines in various stages of development or reclamation. McCoy Elkhorn sells its coal to a variety of customers, both domestically and internationally, primarily to the steel making industry as a high-vol “B” coal or blended coal. The coal controlled at McCoy Elkhorn (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

Mines:

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

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

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Beginning in January 2020 through the report date, Mine #15 and Carnegie 1 mines were idled due to the adverse market effects Covid-19 global pandemic.

Processing & Transportation:

The Bevins #1 Preparation Plant is an 800 ton-per hour coal preparation facility located near Meta, Kentucky, across the road from Mine #15. Bevins #1 has raw coal stockpile storage of approximately 25,000 tons and clean coal stockpile storage of 100,000 tons of coal. The Bevins #1 facility has a fine coal circuit and a stoker circuit that allows for enhance coal recovery and various coal sizing options depending on the needs of the customer. The Company acquired the Bevins Preparation Plants as idled facilities, and since acquisition, the primary work completed at the Bevins Preparation Plants by the Company includes rehabilitating the plants’ warehouse and replacing belt lines.

The Bevins #2 Preparation Plant is on the same permit site as Bevins #1 and is a 500 ton-per-hour processing facility with fine coal recovery and a stoker circuit for coal sizing options. Bevins #2 has raw coal stockpile storage of 25,000 tons of coal and a clean coal stockpile storage of 45,000 tons of coal. We are currently utilizing less than 10% of the available processing capacity of Bevins #1 and Bevins #2.

Both Bevins #1 and Bevins #2 have a batch-weight loadout and rail spur for loading coal into trains for rail shipments. The spur has storage for 110 rail cars and is serviced by CSX Transportation and is located on CSX’s Big Sandy, Coal Run Subdivision. Both Bevins #1 and Bevins #2 have coarse refuse and slurry impoundments called Big Groundhog and Lick Branch. While the Big Groundhog impoundment is nearing the end of its useful life, the Lick Branch impoundment has significant operating life and will be able to provide for coarse refuse and slurry storage for the foreseeable future at Bevins #1 and Bevins #2. Coarse refuse from Bevins #1 and Bevins #2 is belted to the impoundments. Both Bevins #1 and Bevins #2 are facilities owned by McCoy Elkhorn, subject to certain restrictions present in the agreement between McCoy Elkhorn and the surface land owner.

Both Bevins #1 and Bevins #2, as well as the rail loadout, are operational and any work required on any of the plants or loadouts would be routine maintenance. The allocated cost of for this property at McCoy Elkhorn Coal paid by the Company is $95,210.

Due to additional coal processing storage capacity at Bevins #1 and Bevins #2 Preparation Plants, McCoy Elkhorn has the ability to process, store, and load coal for other regional coal producers for an agreed-to fee.

Additional Permits:

In addition to the above mines, McCoy Elkhorn holds 11 additional coal mining permits that are idled operations or in various stages of reclamation. For the idled coal mining operations, McCoy Elkhorn will determine which coal mines to bring back into production, if any, as the coal market changes, and there are currently no other idled mines within McCoy Elkhorn that are slated to go into production in the foreseeable future. Any idled mines that are brought into production would require significant upfront capital investment, and there is no assurance of the feasibility of any such new operations.

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Knott County Coal LLC

General:

Located primarily within Knott County, Kentucky (but with additional idled permits in Leslie County, Perry County, and Breathitt County, Kentucky), Knott County Coal is comprised of 22 idled mining permits (or permits in reclamation) and permits for one preparation facility: the idled Supreme Energy Preparation Plant. The idled mining permits are either in various stages of reclamation or being maintained as idled, pending any changes to the coal market that may warrant reinitiating production. The idled mines at Knott County Coal are primarily underground mines that utilize room-and-pillar mining. The coal controlled at Deane Mining (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

Mines:

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

Processing & Transportation:

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

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

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

Additional Permits:

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

Deane Mining LLC

General:

Located within Letcher County and Knott County, Kentucky, Deane Mining is comprised of one idled underground coal mine (the Access Energy Mine), one idled surface mine (Razorblade Surface) and one idled coal preparation facility called Mill Creek Preparation Plant, along with 12 additional idled mining permits (or permits in reclamation). The idled mining permits are either in various stages of development, reclamation or being maintained as idled, pending any changes to the coal market that may warrant re-starting production. The coal controlled at Deane Mining (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

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Mines:

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

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

Processing & Transportation:

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

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

Additional Permits:

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

Wyoming County Coal LLC

General:

Located within Wyoming County, West Virginia, Wyoming County Coal is comprised of two idled underground mining permits and the three permits associated with the idled Pioneer Preparation Plant, the Hatcher rail loadout, and Simmons Fork Refuse Impoundment. The two idled mining permits are undisturbed underground mines that are anticipated to utilize room-and-pillar mining. The coal controlled at Wyoming County Coal (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” deposits under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

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Mines:

The mining permits held by Wyoming County Coal are in various stages of planning with no mines currently in production.

Potential customers of Wyoming County Coal would include steel mills in the United States or international marketplace although no definitive sales have been identified yet.

Processing & Transportation:

The idled Pioneer Preparation Plant is a 350 ton-per-hour coal preparation facility located near Oceana, West Virginia. The Hatcher rail loadout associated with the Pioneer Preparation Plant is a rail loadout serviced by Norfolk Southern Corporation. The refuse from the preparation facility is trucked to the Simmons Fork Refuse Impoundment, which is approximately 1.0 mile from the Pioneer Preparation facility. The preparation plant utilizes a belt press technology which eliminates the need for pumping slurry into a slurry pond for storage within an impoundment.

The Company is in the initial planning phase of getting estimates on the cost to upgrade the preparation facility to a modern 350 ton per hour preparation facility, although no cost estimates have yet been received. The Company is also in the initial planning phase of getting estimates on the cost and timing of upgrading the rail load out facility to a modern batch weight load out system, although no cost estimates have yet been received.

The Company acquired the Pioneer Preparation Plants as an idled facility, and since acquisition, no work has been performed at the facility. Both the Pioneer Preparation Plant and the rail loadout are idled and would require an undetermined amount of work and capital to bring them into operation, which is currently in the initial phases of planning and no cost estimates have been received. The allocated cost for the property at Wyoming County Coal will pay by the Company is $22,326,101 of which $22,091,688 has been paid using shares of the Company’s Class A Common stock. The remaining portion was paid in cash.

Permits:

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

Perry County Resources LLC

General:

Located primarily within Perry County, Kentucky, Perry County Resources LLC is comprised of one active underground mine (the E4-2 mine) and one active coal processing facility called the Davidson Branch Preparation Plant, along with two additional idled underground mining permits. The two idled mining permits are for underground mines and have been actively mined in the past and being maintained as idled, pending any changes to the coal market that may warrant re-starting production. The coal controlled at Perry County Resources (along with our other subsidiaries) has not been classified as either “proven” or “probable” as defined in the United States Securities and Exchange Commission Industry Guide 7, and as a result, do not have any “proven” or “probable” reserves under such definition and are classified as an “Exploration Stage” pursuant to Industry Guide 7.

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Mines:

The E4-2 mine is an underground mine in the Elkhorn 4 (aka the Amburgy) coal seam located near the town of Hazard, Kentucky. The E4-2 mine is mined via room-and-pillar mining methods using both continuous miners and continuous haulage systems, and the coal is belted directly from the mine to the raw coal stockpile at the Davidson Branch Preparation Plant less than a mile away. The E4-2 mine is currently a “Company-run” mine, whereby the Company manages the workforce at the mine and pays all expenses of the mine. The Company acquired the E4-2 mine as an active mine, and since acquisition in September 2019, the primary work at the E4-2 mine has been rehabilitation of existing infrastructure to increase the operational efficiencies of the mine, including replacing belt structure, repairing equipment, replacing underground mining infrastructure, and installing new mining infrastructure as the mine advances due to coal extraction. The E4-2 mine has the estimated capacity to produce up to approximately 80,000 tons per month of coal.

Mining operations at the E4-2 mine re-commenced on March 29, 2022 under updated licensing after being idled beginning in January 2020 due to the adverse market effects Covid-19 global pandemic.

Processing and Transportation:

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

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

Additional Permits:

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

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

Mineral and Surface Leases

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

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Coal Sales

ARC sells its coal to domestic and international customers, some which blend ARC’s coal at east coast ports with other qualities of coal for export. Coal sales currently come from the Company’s McCoy Elkhorn’s Mine #15 and Carnegie 1 mines, and Perry’s E4-2 mine. The Company may, at times, purchase coal from other regional producers to sell on its contracts.

Coal sales at the Company is primarily outsource to third party intermediaries who act on the Company’s behalf to source potential coal sales and contracts. The third-party intermediaries have no ability to bind the Company to any contracts, and all coal sales are approved by management of the Company.

Due to the Covid-19 global pandemic, traditional sales channels have been disrupted. As a supplier of the raw materials into the steel and industrial industries, our customers are sensitive to global fluctuations in steel demand.

Competition

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

Legal Proceedings

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

Please see financial statement note 9 for detail on cases.

Environmental, Governmental, and Other Regulatory Matters

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

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

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

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

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

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

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

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

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Property

Our principal offices are located at 12115 Visionary Way, Fishers, Indiana 46038. We pay $5,726 per month in rent for the office space and the rental lease expires December 2026. We also rent office space from an affiliated entity, LRR, at 11000 Highway 7 South, Kite, Kentucky 41828 and pay $500 per month rent and the rental lease expires October 30, 2021.

Employees

ARC, through its operating subsidiaries, employs a combination of Company employees and contract labor to mine coal, process coal, and related functions. The Company is continually evaluating the use of Company employees and contract labor to determine the optimal mix of each, given the needs of the Company. Currently, PCR’s E-42 mine is run by contract labor, and the Company’s various coal preparation facilities are run by contract labor.

The Company currently has approximately 11 employees, with a substantial majority based in eastern Kentucky. The Company is headquartered in Fishers, Indiana with six members of the Company’s executive team based at this location.

Results of Operations

Our consolidated operations had operating revenues of $1,980,688 and $10,849,144 for the three-months and six-months ended June 30, 2023 and $16,199,204 and $25,279,828 operating revenue for the three-months and six-months ended June 30, 2022.

For the three-months and six-months ended June 30, 2023 we have incurred net loss attributable to American Resources Corporation Shareholders in the amount of $999,925 and $4,100,794. For the three-months and six-months ended June 30, 2022 we have incurred net loss attributable to American Resources Corporation Shareholders in the amount of $2,443,834 and $5,196,736.

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

For the three months ended June 30, 2023 and 2022, coal sales and processing expenses were $3,798,012 and $5,569,133 respectively, development costs, including loss on settlement of ARO were $2,666,846 and $11,532,406 respectively, and production taxes and royalties $496,824 and $786,008, respectively. Depreciation expense for the same periods ended June 30, 2023 and 2022 were $8,482 and $630,341 respectively. Increase operating expenses were due to increased mining activities, increased development activity and increased asset purchases which led to increased depreciation.

For the six months ended June 30, 2023 and 2022, coal sales and processing expenses were $6,503,830 and $8,459,992 respectively, development costs, including loss on settlement of ARO were $8,300,754 and $18,316,594, respectively, and production taxes and royalties $1,478,461 and $1,605,485, respectively. Depreciation expense for the same periods ended June 30, 2023 and 2022 were $21,818 and $1,256,383 respectively. Decrease in coal sales and processing expenses were due to increase in mine development and expansion. Increase operating expenses were due to increased mining activities, increased development activity and increased asset purchases which led to increased depreciation.

For the three months ended June 30, 2023 and 2022, Other Income (Expense) amounted to $260,000 and $76,000, respectively. For the six months ended June 30, 2023 and 2022, Other Income (Expense) amounted to $353,000 and $158,156, respectively. The primary driver of reduced Other Income (Expense) is less settlement expenses for the current period.

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Liquidity and Capital Resources

As of June 30, 2023, our available cash was $2,874,557. From our inception to-date our activities have been primarily financed from the proceeds of our acquisitions, common stock equity investments and loans.

We expect to fund our liquidity requirements with cash on hand, future borrowings and issuance of common stock and cash flow from operations. If future cash flows are insufficient to meet our liquidity needs or capital requirements, we may reduce our mine development and/or fund a portion of our expenditures through issuance of debt or equity securities, the entry into debt arrangements or from other sources, such as asset sales.

For the six months ending June 30, 2023 our net cash flow used in operating activities was $1,173,168 and for the six months ending June 30, 2022 the net cash flow used in operating activities was $7,950,890.

For the six months ending June 30, 2023 and 2022 net cash proceeds from and (used in) investing activities were $(5,902,189) and $(929,574) respectively.

For the six months ending June 30, 2023 and 2022 net cash proceeds from financing activities were $45,271,122 and $1,187,105 respectively.

As a public Company, we will be subject to certain reporting and other compliance requirements of a publicly reporting Company. We will be subject to certain costs for such compliance which private companies may not choose to make. We have identified such costs as being primarily for audits, legal services, filing expenses, financial and reporting controls and shareholder communications and estimate the cost to be approximately $35,000 monthly if the activities of our Company remain somewhat the same for the next few months. We have included such costs in our monthly cash flow needs and expect to pay such costs from a combination of cash from operations and debt offerings.

Business Effect of Covid-19

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

Off Balance Sheet Arrangements

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

Critical Accounting Policies

The preparation of financial statements requires management to utilize estimates and make judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. These estimates are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. The estimates are evaluated by management on an ongoing basis, and the results of these evaluations form a basis for making decisions about the carrying value of assets and liabilities that are not readily apparent from other sources. Although actual results may differ from these estimates under different assumptions or conditions, management believes that the estimates used in the preparation of our financial statements are reasonable. The critical accounting policies affecting our financial reporting are summarized in Note 1 to the financial statements included in the December 31, 2022 10-K filed on March 30, 2023.

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Recent Accounting Pronouncements

New Accounting Pronouncements: Management has determined that the impact of the following recent FASB pronouncements will not have a material impact on the financial statements.

ASU 2020-01, Equity Method Investments, effective for years beginning after December 15, 2020.

ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) effective for years beginning after December 31, 2020.

ASU 2019-05, Financial Instruments – Credit Losses (Topic 326) effective for years beginning after December 15, 2019

Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

Item 4. Controls and Procedures

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

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

As of June 30, 2023, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.

Based upon our evaluation, as of June 30, 2023, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s insufficient number of staff performing accounting and reporting functions and lack of timely reconciliations. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.

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

(b) Changes in Internal Controls.

There have been no changes in the Company’s internal control over financial reporting during the period ended June 30, 2023 that have materially affected the Company’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

Not applicable.

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

On March 17, 2022, 425,000 of restricted common shares were sold. Gross proceeds to the Company amounted to $1,275,000 which were used for general business purposes.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

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

Item 5. Other Information

None.

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Item 6. Exhibits

The following exhibits are filed herewith except as otherwise noted:

Exhibit Number	Description	Location Reference

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

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

101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

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

	AMERICAN RESOURCES CORPORATION

Date: August 14, 2023	By:	/s/ Mark C. Jensen
	Name:	Mark C. Jensen
	Title:	CEO, Chairman of the Board (Principal Executive Officer)

nullnullnullnullnullnull

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2023	Aug. 14, 2023
Document Information Line Items
Entity Registrant Name	American Resources Corporation
Entity Central Index Key	0001590715
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Jun. 30, 2023
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding		78,213,454
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	000-55456
Entity Incorporation State Country Code	FL
Entity Tax Identification Number	46-3914127
Entity Address Address Line 1	12115 Visionary Way
Entity Address City Or Town	Fishers
Entity Address State Or Province	IN
Entity Address Postal Zip Code	46038
City Area Code	317
Local Phone Number	855-9926
Entity Interactive Data Current	Yes
Common Shares Class A [Member]
Document Information Line Items
Security 12b Title	Class A Common, $0.0001 Par Value
Trading Symbol	AREC
Security Exchange Name	NASDAQ
Warrant [Member]
Document Information Line Items
Security 12b Title	Warrant
Trading Symbol	ARECW
Security Exchange Name	NASDAQ

CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($)	Jun. 30, 2023	Dec. 31, 2022
CURRENT ASSETS
Cash	$ 2,874,557	$ 8,868,566
Receivables	995,230	660,755
Inventory	711,226	446,690
Prepaid fees	1,806,558	786,576
Total Current Assets	6,387,571	10,762,587
OTHER ASSETS
Cash - restricted	48,658,373	2,122,263
Property and Equipment, Net	9,027,465	9,113,722
Right of use assets, net	16,848,225	13,033,889
Investment in llc - Related Party	19,058,593	20,784,866
Notes receivable	99,022	99,022
Total Other Assets	93,691,678	45,153,762
TOTAL ASSETS	100,079,249	55,916,349
CURRENT LIABILITIES
Trade payable	4,738,430	4,916,243
Non-Trade payables	3,023,717	2,524,243
Accounts payable - related party	2,562,016	4,295,232
Accrued interest	142,882	106,886
Current portion of debt	818,686	1,917,506
Current portion of convertible debt	0	9,787,423
Current portion of lease liabilities, net	4,919,257	3,889,235
Total Current Liabilities	16,204,988	27,436,768
OTHER LIABILITIES
Remediation liability	20,792,216	20,295,634
Lease liabilities, net	8,870,661	7,899,251
Bonds Payable, net	43,475,888	0
Total Other Liabilities	73,138,765	28,682,904
Total Liabilities	89,343,753	55,631,653
STOCKHOLDERS' EQUITY (DEFICIT)
AREC - Class A Common stock: $0.0001 par value; 230,000,000 shares authorized, 76,197,850 and 66,777,620 shares issued and outstanding	7,622	6,680
Additional paid-in capital	178,056,886	167,517,259
Accumulated deficit	(167,329,012)	(167,239,243)
Total stockholders' Equity (Deficit)	10,735,496	284,696
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 100,079,249	$ 55,916,349

CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
CONSOLIDATED CONDENSED BALANCE SHEETS
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized	230,000,000	230,000,000
Common Stock, Shares Issued	76,197,850	66,777,620
Common Stock, Shares Outstanding	76,197,850	66,777,620

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Coal Sales	$ 1,675,816	$ 15,969,787	$ 10,399,001	$ 25,001,047
Metal Aggregating, Processing and Sales	33,816	3,292	54,425	40,519
Royalty Income	271,056	226,125	395,718	238,262
Total Revenue	1,980,688	16,199,204	10,849,144	25,279,828
Cost of Coal Sales and Processing	(3,798,012)	(5,569,133)	(6,503,830)	(8,459,992)
Accretion Expense	(248,291)	(363,820)	(496,582)	(631,442)
Depreciation	(8,482)	(630,341)	(21,818)	(1,256,383)
Amortization of Mining Rights	(311,685)	(311,685)	(617,544)	(615,079)
General and Administrative	(1,134,616)	(903,046)	(2,456,084)	(1,923,861)
Professional Fees	(346,477)	(235,487)	(639,732)	(586,425)
Production Taxes and Royalties	(496,824)	(786,008)	(1,478,461)	(1,605,485)
Development Costs	(2,666,846)	(11,532,406)	(8,300,754)	(18,316,594)
Total Operating Expenses	(9,011,233)	(20,331,926)	(20,514,805)	(33,395,261)
Net Loss from Operations	(7,030,545)	(4,132,722)	(9,665,661)	(8,115,433)
Other Income (loss)	260,000	76,000	353,000	158,156
Unrealized loss on trading securities	0	(7,602)	0	(7,602)
Gain on cancelation of debt	0	1,891,848	0	3,413,152
Gain on Sales of Assets	5,936,892	0	5,936,892	0
Interest Income	1,553	3,282	18,764	13,327
Interest expense	(167,825)	(274,640)	(743,789)	(658,336)
Total Other income (expense)	6,030,620	1,688,888	5,564,867	2,918,697
Net Income (Loss)	$ (999,925)	$ (2,443,834)	$ (4,100,794)	$ (5,196,736)
Net loss per common share - basic and diluted	$ (0.01)	$ (0.04)	$ (0.05)	$ (0.08)
Weighted average common shares outstanding	76,197,850	66,377,788	74,584,440	65,846,220

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT) (Unaudited) - USD ($)	Total	Common Stock	APIC	Accumulated Deficit
Balance, shares at Dec. 31, 2021		65,084,992
Balance, amount at Dec. 31, 2021	$ (2,345,408)	$ 6,508	$ 163,441,655	$ (165,793,571)
Issuance of common shares for Warrant Conversion, shares		488,594
Issuance of common shares for Warrant Conversion, amount	665,391	$ 50	665,341	0
Issuance of common shares for Conversion of debt and interest, shares		582,885
Issuance of common shares for Conversion of debt and interest, amount	622,210	$ 58	622,152	0
Amortization of debt discount	(40,655)	0	(40,655)	0
Stock compensation - options	199,843	0	199,843	0
Net Loss	(2,752,902)	$ 0		(2,752,902)
Balance, shares at Mar. 31, 2022		66,156,471
Balance, amount at Mar. 31, 2022	(3,651,521)	$ 6,616	164,888,336	(168,538,589)
Balance, shares at Dec. 31, 2021		65,084,992
Balance, amount at Dec. 31, 2021	(2,345,408)	$ 6,508	163,441,655	(165,793,571)
Stock compensation - options	389,868
Balance, shares at Jun. 30, 2022		66,613,085
Balance, amount at Jun. 30, 2022	(4,697,267)	$ 6,661	166,286,379	(170,969,757)
Balance, shares at Mar. 31, 2022		66,156,471
Balance, amount at Mar. 31, 2022	(3,651,521)	$ 6,616	164,888,336	(168,538,589)
Issuance of common shares for Warrant Conversion, shares		5,364
Issuance of common shares for Warrant Conversion, amount	8,064	$ 0	8,064	0
Issuance of common shares for Conversion of debt and interest, shares		451,250
Issuance of common shares for Conversion of debt and interest, amount	1,200,000	$ 45	1,199,955	0
Stock compensation - options	190,024	0	190,024	0
Net Loss	(2,443,834)	$ 0	0	(2,443,834)
Balance, shares at Jun. 30, 2022		66,613,085
Balance, amount at Jun. 30, 2022	(4,697,267)	$ 6,661	166,286,379	(170,969,757)
Balance, shares at Dec. 31, 2022		66,777,620
Balance, amount at Dec. 31, 2022	284,696	$ 6,680	167,517,259	(167,239,243)
Issuance of common shares for Warrant Conversion, shares		9,420,230
Issuance of common shares for Warrant Conversion, amount	9,787,423	$ 942	9,786,481	0
Stock compensation - options	376,573	0	376,573	0
Net Loss	(3,100,869)	$ 0		(3,100,869)
Balance, shares at Mar. 31, 2023		76,197,850
Balance, amount at Mar. 31, 2023	7,347,823	$ 7,622	177,680,313	(170,340,112)
Balance, shares at Dec. 31, 2022		66,777,620
Balance, amount at Dec. 31, 2022	284,696	$ 6,680	167,517,259	(167,239,243)
Stock compensation - options	753,146
Balance, shares at Jun. 30, 2023		76,197,850
Balance, amount at Jun. 30, 2023	10,735,496	$ 7,622	178,056,886	(167,329,012)
Balance, shares at Mar. 31, 2023		76,197,850
Balance, amount at Mar. 31, 2023	7,347,823	$ 7,622	177,680,313	(170,340,112)
Stock compensation - options	376,573	0	376,573	0
Net Loss	(999,925)	0	0	(999,925)
Recapture expenses for bond issuance	4,011,025	$ 0	0	4,011,025
Balance, shares at Jun. 30, 2023		76,197,850
Balance, amount at Jun. 30, 2023	$ 10,735,496	$ 7,622	$ 178,056,886	$ (167,329,012)

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows from Operating activities:
Net loss	$ (4,100,794)	$ (5,196,736)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on debt forgiveness	0	(3,413,152)
Depreciation expense	21,818	1,256,383
Amortization of mining rights	617,544	615,079
Accretion expense	496,582	631,442
Amortization expense of right to use assets	(695,933)	(15,021)
Amortization of issuance costs and debt discount	0	0
Options expense	753,146	389,867
Warrant expense	0	673,455
Issuance of common shares for service	0	0
Change in current assets and liabilities:
Accounts receivable	(334,475)	(2,179,134)
Inventory	(264,536)	0
Prepaid expenses and other assets	(1,019,982)	(191,448)
Accounts payable	(321,661)	(229,526)
Accrued interest	(35,996)	(299,700)
Accounts payable - related party	(1,733,216)	7,601
Net cash (used in)/generated from operations	(5,902,189)	(7,950,890)
Cash Flows from Investing activities:
Cash used in investments in LLCs	1,726,273	(742,398)
Cash invested in note receivable	0	(335,000)
Cash received (paid) for PPE, net	(553,105)	147,824
Net cash (used in)/generated from investing activities	1,173,168	(929,574)
Cash Flows from Financing activities:
Principal payments on finance lease	(1,116,969)	(99,204)
Principal payments on debt	(1,098,822)	(1,276,691)
Proceeds from bonds	43,475,888	0
Proceeds from the bond lookback	4,011,025	0
Proceeds from debt	0	2,563,000
Proceeds from warrant conversions	0	0
Net cash (used in)/generated from financing activities	45,271,122	1,187,105
Increase(decrease) in cash and restricted cash	40,542,101	(7,693,359)
Cash and restricted cash, beginning of period	10,990,829	12,588,113
Cash and restricted cash, end of period	51,532,930	4,894,754
Supplemental Information
Cash paid for interest	0	64,094
Conversion of debt and interest to common shares	0	1,822,210
Acquisition of right of use assets for lease obligations	$ 3,814,336	$ 1,117,219

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation:

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

Interim Financial Information:

Convertible Preferred Securities:

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

Cash, Cash Equivalents and Restricted Cash:

	June 30, 2023		June 30, 2022
Cash	$	2,874,557	$	3,807,783
Restricted Cash		48,658,373		1,086,971
Total cash and restricted cash presented in the consolidated statement of cash flows	$	51,532,930	$	4,894,754

Asset Retirement Obligations (ARO) – Reclamation:

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

The table below reflects the changes to our ARO:

Balance at December 31, 2022	$	20,295,634
Accretion – six months June 30, 2023		496,583
Reclamation work – six months June 30, 2023		-
Balance at June 30, 2023	$	20,792,216

Balance at December 31, 2021	$	18,951,587
Accretion – six months Jun 30, 2022		631,442
Reclamation work – six months June 30, 2022		-
Balance at June 30, 2022	$	19,583,029

Allowance For Doubtful Accounts:

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of June 30, 2023 and December 31, 2022.

Prepaid Fees and Advance Royalties:

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

Inventory:

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

Reclassifications:

Reclassifications of prior periods have been made to conform with current year presentation.

PROPERTY AND EQUIPMENT

6 Months Ended

Jun. 30, 2023

PROPERTY AND EQUIPMENT

NOTE 2 - PROPERTY AND EQUIPMENT

NOTE 2 - PROPERTY AND EQUIPMENT

At June 30, 2023 and December 31, 2022, property and equipment were comprised of the following:

	June 30, 2023			December 31, 2022
Processing and rail facility	$	553,103		$	-
Underground equipment		-			-
Surface equipment		-			-
Coal refuse storage		12,134,192			12,134,192
Mine Development		561,575			561,575
Land		1,617,435			1,617,435
Less: Accumulated depreciation		(5,838,840	)		(5,199,478	)

Total Property and Equipment, Net	$	9,027,465		$	9,113,724

The estimated useful lives are as follows:

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

NOTES PAYABLE

6 Months Ended

Jun. 30, 2023

NOTES PAYABLE

NOTE 4 - NOTES PAYABLE

NOTE 3 - NOTES PAYABLE

RIGHT OF USE ASSETS AND LEASES

6 Months Ended

Jun. 30, 2023

RIGHT OF USE ASSETS AND LEASES

NOTE 3 - RIGHT OF USE ASSETS

NOTE 4 – RIGHT OF USE ASSETS AND LEASES

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

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

On November 8, 2022, American Carbon Corp entered into a Financial Lease for equipment at 2069 Highway

At June 30, 2023, right of use assets and liabilities were comprised of the following:

	June 30, 2023				June 30, 2022
	Asset		Liability		Asset		Liability
Operating Leases		591,967		592,745		682,551		676,347

Finance Leases		16,235,498		13,197,171		1,117,219		997,239

RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

RELATED PARTY TRANSACTIONS

NOTE 5 - RELATED PARTY TRANSACTIONS

NOTE 5 - RELATED PARTY TRANSACTIONS

Land Resources & Royalties

Land Betterment Corp

American Opportunity Venture, LLC

American Opportunity Venture II, LLC

Novusterra, Inc.

Land Betterment Exchange (LBX)

FUB Mineral LLC

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

EQUITY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

EQUITY TRANSACTIONS

NOTE 8 - EQUITY TRANSACTIONS

NOTE 6 – EQUITY TRANSACTIONS

Employee stock compensation expense for the three-month period ending June 30, 2023 and 2022 amounted to $376,573 and $190,024 respectively.

Employee stock compensation expense for the six-month period ending June 30, 2023 and 2022 amounted to $753,146 and $389,868 respectively.

On May 1, 2023, the company issued employee stock options in the amount of 6,500 Class A Common Stock.

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

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

Warrant Exercises

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

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

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

New Warrant Issuances

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

	June 30, 2023
Expected Dividend Yield		0	%
Expected volatility		87.97	%
Risk-free rate		0.870	%
Expected life of warrants	1.592-6.60 years

Company Warrants:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Exercisable (Vested) – December 31,2021		8,401,221	$	1.135		2.152	$	7,453,214
Granted		4,601,250	$	3.531		4.814	$	69,700
Forfeited or Expired		-	$	-		-	$	-
Exercised		1,705,508	$	1.226		3.070	$	5,347,983
Outstanding – June 30, 2022		11,296,963	$	2.102		2.771	$	9,918,604
Exercisable (Vested) – June 30, 2022		11,296,963	$	2.102		2.771	$	9,918,604

Exercisable (Vested) – December 31, 2022		9,724,369	$	2.25		2.69	$	6,515,327
Granted		-	$	-		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - June 30, 2023		9,730,869	$	2.00		3.86	$	6,515,327
Exercisable (Vested) - June 30, 2023		9,730,869	$	2.00		3.86	$	6,515,327

Company Options:

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding – December 31, 2021		2,159,269	$	1.606		5.660	$	1,919,129
Exercisable (Vested) – December 31, 2021		888,659	$	1.581		5.047	$	749,470
Granted		75,000	$	2.560		6.597	$	105,000
Forfeited or Expired		125,000	$	1.998		3.00	$	58,500
Exercised		25,000	$	1.640		6.562	$	41,500
Outstanding – June 30, 2022		2,084,269	$	1.551		5.369	$	2,363,549
Exercisable (Vested) – June 30, 2022		1,055,325	$	1.496		5.191	$	1,278,944

Outstanding – December 31, 2022		4,209,269	$	1.665		5.39	$	3,186,870
Exercisable (Vested) – December 31, 2022		3,159,268	$	1.517		4.91	$	3,141,183
Granted		6,500	$	1.14		4.00	$	4,810
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - June 30, 2023		4,215,769	$	1.517		4.64	$	3,145,993
Exercisable (Vested) - June 30, 2023		4,215,769	$	1.517		4.64	$	3,145,993

CONTINGENCIES

6 Months Ended

Jun. 30, 2023

CONTINGENCIES

CONTINGENCIES

NOTE 7 - CONTINGENCIES

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

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

SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2023

SUBSEQUENT EVENTS

NOTE 10 - SUBSEQUENT EVENTS

NOTE 8 - SUBSEQUENT EVENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis Of Presentation And Consolidation

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

Interim Financial Information

Convertible Preferred Securities

Cash

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

Cash, Cash Equivalents and Restricted cash

	June 30, 2023		June 30, 2022
Cash	$	2,874,557	$	3,807,783
Restricted Cash		48,658,373		1,086,971
Total cash and restricted cash presented in the consolidated statement of cash flows	$	51,532,930	$	4,894,754

Asset Retirement Obligations (aro) - Reclamation

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

The table below reflects the changes to our ARO:

Balance at December 31, 2022	$	20,295,634
Accretion – six months June 30, 2023		496,583
Reclamation work – six months June 30, 2023		-
Balance at June 30, 2023	$	20,792,216

Balance at December 31, 2021	$	18,951,587
Accretion – six months Jun 30, 2022		631,442
Reclamation work – six months June 30, 2022		-
Balance at June 30, 2022	$	19,583,029

Allowance For Doubtful Accounts

Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of June 30, 2023 and December 31, 2022.

Prepaid Fees and Advance Royalties

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

Inventory

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

Reclassifications

Reclassifications of prior periods have been made to conform with current year presentation.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule Of Restricted Cash And Cash Equivalents

	June 30, 2023		June 30, 2022
Cash	$	2,874,557	$	3,807,783
Restricted Cash		48,658,373		1,086,971
Total cash and restricted cash presented in the consolidated statement of cash flows	$	51,532,930	$	4,894,754

Schedule Of Asset Retirement Obligations

Balance at December 31, 2022	$	20,295,634
Accretion – six months June 30, 2023		496,583
Reclamation work – six months June 30, 2023		-
Balance at June 30, 2023	$	20,792,216

Balance at December 31, 2021	$	18,951,587
Accretion – six months Jun 30, 2022		631,442
Reclamation work – six months June 30, 2022		-
Balance at June 30, 2022	$	19,583,029

PROPERTY AND EQUIPMENT (Tables)

6 Months Ended

Jun. 30, 2023

PROPERTY AND EQUIPMENT

Schedule Of Property And Equipment

	June 30, 2023			December 31, 2022
Processing and rail facility	$	553,103		$	-
Underground equipment		-			-
Surface equipment		-			-
Coal refuse storage		12,134,192			12,134,192
Mine Development		561,575			561,575
Land		1,617,435			1,617,435
Less: Accumulated depreciation		(5,838,840	)		(5,199,478	)

Total Property and Equipment, Net	$	9,027,465		$	9,113,724

Schedule Of Property And Equipment estimated useful lives

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

RIGHT OF USE ASSETS AND LEASES (Tables)

6 Months Ended

Jun. 30, 2023

RIGHT OF USE ASSETS AND LEASES

Schedule Of Right Of Use Assets And Liablities

	June 30, 2023				June 30, 2022
	Asset		Liability		Asset		Liability
Operating Leases		591,967		592,745		682,551		676,347

Finance Leases		16,235,498		13,197,171		1,117,219		997,239

EQUITY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2023

EQUITY TRANSACTIONS

Schedule Of Black scholes option pricing model

	June 30, 2023
Expected Dividend Yield		0	%
Expected volatility		87.97	%
Risk-free rate		0.870	%
Expected life of warrants	1.592-6.60 years

Schedule Of Warrants

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Warrants		Price		Life in Years		Value
Exercisable (Vested) – December 31,2021		8,401,221	$	1.135		2.152	$	7,453,214
Granted		4,601,250	$	3.531		4.814	$	69,700
Forfeited or Expired		-	$	-		-	$	-
Exercised		1,705,508	$	1.226		3.070	$	5,347,983
Outstanding – June 30, 2022		11,296,963	$	2.102		2.771	$	9,918,604
Exercisable (Vested) – June 30, 2022		11,296,963	$	2.102		2.771	$	9,918,604

Exercisable (Vested) – December 31, 2022		9,724,369	$	2.25		2.69	$	6,515,327
Granted		-	$	-		-	$	-
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - June 30, 2023		9,730,869	$	2.00		3.86	$	6,515,327
Exercisable (Vested) - June 30, 2023		9,730,869	$	2.00		3.86	$	6,515,327

Schedule Of Options

			Weighted		Weighted
			Average		Average		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Options		Price		Life in Years		Value
Outstanding – December 31, 2021		2,159,269	$	1.606		5.660	$	1,919,129
Exercisable (Vested) – December 31, 2021		888,659	$	1.581		5.047	$	749,470
Granted		75,000	$	2.560		6.597	$	105,000
Forfeited or Expired		125,000	$	1.998		3.00	$	58,500
Exercised		25,000	$	1.640		6.562	$	41,500
Outstanding – June 30, 2022		2,084,269	$	1.551		5.369	$	2,363,549
Exercisable (Vested) – June 30, 2022		1,055,325	$	1.496		5.191	$	1,278,944

Outstanding – December 31, 2022		4,209,269	$	1.665		5.39	$	3,186,870
Exercisable (Vested) – December 31, 2022		3,159,268	$	1.517		4.91	$	3,141,183
Granted		6,500	$	1.14		4.00	$	4,810
Forfeited or Expired		-	$	-		-	$	-
Exercised		-	$	-		-	$	-
Outstanding - June 30, 2023		4,215,769	$	1.517		4.64	$	3,145,993
Exercisable (Vested) - June 30, 2023		4,215,769	$	1.517		4.64	$	3,145,993

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022	Dec. 31, 2021
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash	$ 2,874,557	$ 8,868,566	$ 3,807,783
Restricted Cash	48,658,373		1,086,971
Total cash and restricted cash presented in the consolidated statement of cash flows	$ 51,532,930	$ 10,990,829	$ 4,894,754	$ 12,588,113

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Beginning Balance	$ 20,295,634	$ 18,951,587
Accretion	496,583	631,442
Reclamation work	0	0
Ending Balance	$ 20,792,216	$ 19,583,029

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ownership Percent	100.00%
Discount Rate	10.00%
Allowance For Trade Receivables	$ 0	$ 0
Allowance For Other Accounts Receivables	$ 1,888,070	$ 1,744,570

PROPERTY AND EQUIPMENT (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Less: Accumulated Depreciation	$ (5,838,840)	$ (5,199,478)
Total Property And Equipment, Net	9,027,465	9,113,724
Underground equipment [Member]
Property And Equipment	0	0
Surface equipment [Member]
Property And Equipment	0	0
Mine development [Member]
Property And Equipment	561,575	561,575
Processing and rail facilities [Member]
Property And Equipment	553,103	0
Coal refuse storage [Member]
Property And Equipment	12,134,192	12,134,192
Land [Member]
Property And Equipment	$ 1,617,435	$ 1,617,435

PROPERTY AND EQUIPMENT (Details 1)	6 Months Ended
PROPERTY AND EQUIPMENT (Details 1)	Jun. 30, 2023
Coal refuse storage [Member]
Estimated Useful Lives	10 years
Processing and rail facilities [Member] \| Minimum [Member]
Estimated Useful Lives	7 years
Processing and rail facilities [Member] \| Maximum [Member]
Estimated Useful Lives	20 years
Rare Earth Processing Equipment [Member]
Estimated Useful Lives	5 years
Underground equipment [Member]
Estimated Useful Lives	5 years
Surface equipment [Member]
Estimated Useful Lives	7 years
Mining Rights [Member] \| Minimum [Member]
Estimated Useful Lives	5 years
Mining Rights [Member] \| Maximum [Member]
Estimated Useful Lives	10 years

PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
PROPERTY AND EQUIPMENT
Depreciation Expense	$ 320,167	$ 630,341	$ 639,362	$ 1,256,383

NOTES PAYABLE (Details Narrative) - USD ($)	3 Months Ended			6 Months Ended
NOTES PAYABLE (Details Narrative) - USD ($)	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023
NOTES PAYABLE
Principal reductions on long term debt	$ 21,045		$ 3,389,301
Increase to long term debt		$ 0	$ 2,843,635
Convertible notes	$ 9,891,241			$ 9,891,241
Conversion of notes into common stock				9,420,230

RIGHT OF USE ASSETS AND LEASES (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022
RIGHT OF USE ASSETS AND LEASES
Operating Leases asset	$ 591,967	$ 682,551
Operating Leases liabilities	592,745	676,347
Finance Leases Asset	16,235,498	1,117,219
Finance Leases Liability	$ 13,197,171	$ 997,239

RIGHT OF USE ASSETS AND LEASES (Details Narrative)		1 Months Ended	6 Months Ended
RIGHT OF USE ASSETS AND LEASES (Details Narrative)	Oct. 08, 2022 USD ($) ft²	Aug. 17, 2022 USD ($) a	Jun. 30, 2023 USD ($) a
Rent expense, monthly	$ 4,745		$ 5,726
Discounted lease payment rate			10.82%
Rental lease expiration date			December 2026
Lease term	2 years
Warehouse space \| ft²	6,700
Commercial Land Lease sublease area \| a		7	7
Sublease [Member]
Rent expense, monthly		$ 3,500
Lease term		5 years
LRR [Member]
Rent expense, monthly			$ 1,702
Rental lease expiration date			January 1, 2030
Amended Lease [Member]
Rent expense, monthly			$ 5,869
Lease term			10 years

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Royalty Expense	$ 496,824	$ 786,008	$ 1,478,461	$ 1,605,485
Novusterra, Inc [Member] \| March, 2021 [Member]
Ownership Percentage			50.00%
Common shares exchange for equity method investment			15,750,000
Land Betterment Exchange (LBX) [Member]
LBX token par value	250		$ 250
LBX token holding, Description			The Company is the holder of 2,000,000 LBX Tokens
Land Betterment Corporation [Member] \| Contract Services Agreement [Member]
Terms of contract, Description			The contract terms state that service costs are passed through to the Company with a 10% mark-up and a 50% share of cost savings which includes payroll covering aforementioned members of the Company’s management
Amounts payable under the agreement	1,148,385	2,103,400	$ 2,112,561	3,677,415
Amount paid to related party	1,383,360	1,062,198	3,584,957	1,901,478
Service charges	0	0	0	0
LRR [Member]
Amount paid to related party	0			0
Advance to related party	0			0
Royalty Expense	103,001			81,284
Amount owed from related party	336,331	$ 81,284	336,331	$ 81,284
FUB Mineral LLC [Member] \| October 1, 2021 [Member]
Invested amount	250,000		$ 250,000
American Opportunity Venture, LLC [Member] \| January, 2022 [Member]
Ownership Percentage			50.00%
Invested amount	2,250,000		$ 2,250,000
American Opportunity Venture II, LLC [Member] \| March, 2022 [Member]
Ownership Percentage			100.00%
Invested amount	$ 25,000		$ 25,000

EQUITY TRANSACTIONS (Details)	6 Months Ended
EQUITY TRANSACTIONS (Details)	Jun. 30, 2023
Expected Dividend Yield	0.00%
Risk-free rate	0.87%
Expected volatility	87.97%
Minimum [Member]
Expected life of warrants	1 year 7 months 3 days
Maximum [Member]
Expected life of warrants	6 years 7 months 6 days

EQUITY TRANSACTIONS (Detail 1) - Warrants [Member] - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Outstanding, Beginning Balance	9,724,369	8,401,221
Granted	0	4,601,250
Forfeited Or Expired	0	0
Exercised	0	1,705,508
Outstanding, Ending Balance	9,730,869	11,296,963
Exercisable (Vested), Ending Balance	9,730,869	11,296,963
Weighted Average Exercise Price, Beginning Balance	$ 2.25	$ 1.135
Grantes, Weighted Average Exercise Price	0	3.531
Forfeited Or Expired, Weighted Average Exercise Price	0	0
Exercised, Weighted Average Exercise Price	0	1.226
Weighted Average Exercise Price, Ending Balance	2.00	2.102
Exercisable (Vested), Weighted Average Exercise Price, Ending Balance	$ 2.00	$ 2.102
Weighted Average Contractual Life in Years, Beginning Balance	2 years 8 months 8 days	2 years 1 month 25 days
Weighted Average Contractual Life in Years, Granted		4 years 9 months 23 days
Weighted Average Contractual Life in Years, Exercised		3 years 25 days
Weighted Average Contractual Life in Years, Ending Balance	3 years 10 months 9 days	2 years 9 months 7 days
Exercisable (Vested), Weighted Average Contractual Life in Years, Ending Balance	3 years 10 months 9 days	2 years 9 months 7 days
Aggregate Intrinsic value, Beginning Balance	$ 6,515,327	$ 7,453,214
Aggregate Intrinsic value, Granted	0	69,700
Aggregate Intrinsic value, Forfeited Or Expired	0	0
Aggregate Intrinsic value, Exercised	0	5,347,983
Aggregate Intrinsic value, Ending Balance	6,515,327	9,918,604
Exercisable (Vested), Aggregate Intrinsic value, Ending Balance	$ 6,515,327	$ 9,918,604

EQUITY TRANSACTIONS (Detail 2) - Options [Member] - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Outstanding, Beginning Balance	4,209,269	2,159,269
Exercisable (Vested), Beginning Balance	3,159,268	888,659
Granted	6,500	75,000
Forfeited Or Expired	0	125,000
Exercised	0	25,000
Outstanding, Ending Balance	4,215,769	2,084,269
Exercisable (Vested), Ending Balance	4,215,769	1,055,325
Weighted Average Exercise Price, Beginning Balance	$ 1.665	$ 1.606
Exercisable (Vested), Weighted Average Exercise Price, Beginning Balance	1.517	1.581
Grantes, Weighted Average Exercise Price	1.14	2.560
Forfeited Or Expired, Weighted Average Exercise Price	0	1.998
Exercised, Weighted Average Exercise Price	0	1.640
Weighted Average Exercise Price, Ending Balance	1.517	1.551
Exercisable (Vested), Weighted Average Exercise Price, Ending Balance	$ 1.517	$ 1.496
Weighted Average Contractual Life in Years, Beginning Balance	5 years 4 months 20 days	5 years 7 months 28 days
Exercisable (Vested), Weighted Average Contractual Life in Years, Beginning Balance	4 years 10 months 28 days	5 years 17 days
Weighted Average Contractual Life in Years, Granted	4 years	6 years 7 months 4 days
Weighted Average Contractual Life in Years, Forfeited or Expired		3 years
Weighted Average Contractual Life in Years, Exercised		6 years 6 months 22 days
Weighted Average Contractual Life in Years, Ending Balance	4 years 7 months 20 days	5 years 4 months 13 days
Exercisable (Vested), Weighted Average Contractual Life in Years, Ending Balance	4 years 7 months 20 days	5 years 2 months 8 days
Aggregate Intrinsic value, Beginning Balance	$ 3,186,870	$ 1,919,129
Exercisable (Vested), Aggregate Intrinsic value, Beginning Balance	3,141,183	749,470
Aggregate Intrinsic value, Granted	4,810	105,000
Aggregate Intrinsic value, Forfeited Or Expired	0	58,500
Aggregate Intrinsic value, Exercised	0	41,500
Aggregate Intrinsic value, Ending Balance	3,145,993	2,363,549
Exercisable (Vested), Aggregate Intrinsic value, Ending Balance	$ 3,145,993	$ 1,278,944

EQUITY TRANSACTIONS (Details Narrative) - USD ($)			1 Months Ended	3 Months Ended				6 Months Ended		12 Months Ended
EQUITY TRANSACTIONS (Details Narrative) - USD ($)	May 02, 2023	Feb. 02, 2022	Jan. 26, 2022	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022	Feb. 07, 2022	Mar. 30, 2022	Jan. 13, 2022
Employee Stock Compensation				$ 376,573	$ 376,573	$ 190,024	$ 199,843	$ 753,146	$ 389,868
Common Shares Class A [Member]
Issuance of common shares								884,229
Employee stock options issued	6,500
Conversion of debt and interest								$ 1,006,726
Common Shares Class A [Member] \| Warrant Exercise [Member]
Shares Issued							22,500				47,500	117,250
Exercise price							$ 1.50				$ 1.50	$ 1.50
Common Shares Class A [Member] \| Warrant A-11 [Member]
Shares Issued										50,000
Exercise price										$ 4.25
Warrants expiration date										Feb. 07, 2026
Common Shares Class A [Member] \| Warrant C-37 [Member]
Conversion of debt and interest		$ 600,000
Shares Issued		60,000
Exercise price		$ 1.50
Warrants expiration date		Feb. 02, 2023
Common Shares Class A [Member] \| Warrant A-10 [Member]
Shares Issued			10,000
Exercise price			$ 2.05
Warrants expiration date			Jan. 26, 2024

CONTINGENCIES (Details Narrative)		6 Months Ended
CONTINGENCIES (Details Narrative)	Oct. 08, 2022 USD ($) ft²	Jun. 30, 2023 USD ($) a	Dec. 31, 2022 USD ($)	Aug. 17, 2022 a
Rent expense, monthly	$ 4,745	$ 5,726
Commercial Land Lease sublease area \| a		7		7
Warehouse space \| ft²	6,700
Rental lease expiration date		December 2026
Accrued payable		$ 142,882	$ 106,886
Lease term	2 years
LRR [Member]
Rent expense, monthly		$ 1,702
Rental lease expiration date		January 1, 2030
Commonwealth of Kentucky [Member] \| Kentucky Energy Cabinet [Member]
Claims Amounts		$ 1,141,000
Accounts payable to related party		322,233
Accrued payable		1,432,077
Mine Health Safety [Member]
Claims Amounts		729,280
Accrued payable		351,303
Amended Lease [Member]
Rent expense, monthly		$ 5,869
Lease term		10 years

SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($)	Aug. 11, 2023	Aug. 01, 2023
Integrity Carbon Solutions LLC [Member]
Deposit amount received		$ 20,000,000
Considration of enterprise value		20,600,000
Quarterly Payments		$ 500,000
Enterprise value, description		Total consideration for the Company’s Deane Mining complex is approximately $20,600,000 of enterprise value which consists of: (i) the $200,000 Deane Deposit, (ii) $800,000 paid upon the consummation of the transaction as contemplated in the Letter of Intent (“Closing Payment”), (iii) $500,000 per calendar quarter for a period twenty-one consecutive calendar quarters following the Closing Payment (“Quarterly Payments”), and (iv) the assumption and replacement of approximately $9,100,000 of associated environmental reclamation bonds.
Accounts payable to related party		$ 800,000
Environmental reclamation bonds		$ 9,100,000
Marco International Corporation [Member]
Index pricing rate	70.00%
Index pricing premium rate	3.25%

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