Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2020 | Jun. 17, 2020 | |
Cover [Abstract] | ||
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 | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Mar. 31, 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Ex Transition Period | false | |
Entity Common Stock Shares Outstanding | 26,040,512 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash | $ 43,745 | $ 3,324 |
Accounts Receivable | 37,400 | 2,424,905 |
Inventory | 150,504 | 515,630 |
Prepaid fees | 175,000 | 0 |
Accounts Receivable - Other | 234,240 | 234,240 |
Total Current Assets | 640,889 | 3,178,099 |
OTHER ASSETS | ||
Cash - restricted | 415,487 | 265,487 |
Processing and rail facility | 12,554,715 | 12,723,163 |
Underground equipment | 8,550,626 | 8,294,188 |
Surface equipment | 3,136,906 | 3,224,896 |
Acquired mining rights | 669,860 | 669,860 |
Coal refuse storage | 12,171,271 | 12,171,271 |
Less Accumulated Depreciation | (11,981,983) | (11,162,622) |
Land | 1,748,169 | 1,748,169 |
Note Receivable | 4,117,139 | 4,117,139 |
Total Other Assets | 31,382,190 | 32,051,551 |
TOTAL ASSETS | 32,023,079 | 35,229,650 |
CURRENT LIABILITIES | ||
Accounts payable | 11,763,906 | 11,044,479 |
Accounts payable - related party | 803,602 | 718,156 |
Accrued interest | 2,363,380 | 2,869,763 |
Due to affiliate | 132,639 | 132,000 |
Current portion of long term-debt (net of unamortized discount of $- and $-) | 17,944,572 | 20,494,589 |
Convertible note payables - short term | 0 | 7,419,612 |
Current portion of reclamation liability | 2,327,169 | 2,327,169 |
Total Current Liabilities | 35,335,268 | 45,006,407 |
OTHER LIABILITIES | ||
Long-term portion of note payable (net of issuance costs of $425,820 and $428,699) | 5,415,271 | 5,415,271 |
Convertible note payables - long term | 9,164,011 | 0 |
Reclamation liability | 17,521,976 | 17,512,613 |
Total Other Liabilities | 32,101,258 | 22,927,884 |
Total Liabilities | 67,436,526 | 67,934,291 |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Additional paid-in capital | 90,993,691 | 90,326,104 |
Accumulated deficit | (126,409,878) | (123,033,485) |
Total Stockholders' Equity (Deficit) | (35,413,447) | (32,704,641) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 32,023,079 | 35,229,650 |
Common Class A [Member] | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
AREC - Class A Common stock: $.0001 par value; 230,000,000 shares authorized, 27,410,512 and 27,410,512 shares issued and outstanding | 2,740 | 2,740 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock value | 0 | 0 |
Series C Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock value | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT LIABILITIES | ||
Current portion of long term-debt net of unamortized discount | $ 0 | $ 0 |
OTHER LIABILITIES | ||
Long-term portion of note payable net of issuance costs | $ 425,820 | $ 428,699 |
Series A Preferred Stock [Member] | ||
OTHER LIABILITIES | ||
Preferred Stock, Par Value | $ .0001 | $ .0001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Series C Preferred Stock [Member] | ||
OTHER LIABILITIES | ||
Preferred Stock, Par Value | $ .0001 | $ .0001 |
Preferred Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Class A [Member] | ||
OTHER LIABILITIES | ||
Common Stock, Par Value | $ .0001 | $ .0001 |
Common Stock, Shares Authorized | 230,000,000 | 230,000,000 |
Common Stock, Shares Issued | 27,410,512 | 27,410,512 |
Common Stock, Shares Outstanding | 27,410,512 | 27,410,512 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED | ||
Coal Sales | $ 524,334 | $ 6,994,276 |
Total Revenue | 524,334 | 6,994,276 |
Cost of Coal Sales and Processing | (1,855,187) | (6,644,087) |
Accretion Expense | (370,587) | (321,701) |
Depreciation | (915,052) | (816,916) |
Amortization of Mining Rights | (313,224) | (536,791) |
General and Administrative | (842,925) | (1,372,588) |
Professional Fees | (194,046) | (4,333,896) |
Production Taxes and Royalties | (160,230) | (1,259,586) |
Development Costs | (128,159) | (1,600,117) |
Total Operating expenses | (4,779,410) | (16,885,682) |
Net Loss from Operations | (4,255,076) | (9,891,406) |
Other Income and (expense) | ||
Loss on payable settlement | 0 | (22,660) |
Other Income | 1,412,005 | 266,425 |
Amortization of debt discount and debt issuance costs | 0 | (134,296) |
Interest Income | 82,343 | 41,171 |
Interest expense | (500,640) | (324,854) |
Total Other income (expense) | 993,708 | (174,214) |
Net loss attributable to American Resources Corp. Shareholders | $ (3,261,368) | $ (10,065,620) |
Net loss per common share - basic and diluted | $ (0.12) | $ (0.48) |
Weighted average common shares outstanding- basic and diluted | 27,267,197 | 20,798,065 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGESS STOCKHOLDERS OF DEFICIT UNAUDITED - USD ($) | Total | American Resources Common Stock | American Resources Preferred Series A | American Resources Preferred Series B | American Resources Preferred Series C | Additional Paid-In Capital | Accumulated Deficit | Controlling Interest |
Balance, shares at Dec. 31, 2018 | 17,763,469 | 481,780 | 50,000 | |||||
Balance, amount at Dec. 31, 2018 | $ (9,199,822) | $ 1,776 | $ 48 | $ 0 | $ 5 | $ 42,913,532 | $ (52,115,183) | $ 0 |
Issuance of common shares for cash, net, shares | 1,170,200 | |||||||
Issuance of common shares for cash, net, amount | 4,254,000 | $ 117 | $ 0 | $ 0 | $ 0 | 4,253,883 | 0 | 0 |
Issuance of common shares for services, shares | 159,000 | |||||||
Issuance of common shares for services, amount | 1,672,200 | $ 16 | $ 0 | $ 0 | $ 0 | 1,672,184 | 0 | 0 |
Issuance of common shares for asset acquisition, shares | 2,000,000 | |||||||
Issuance of common shares for asset acquisition, amount | 24,400,000 | $ 200 | $ 0 | $ 0 | $ 0 | 24,399,800 | 0 | 0 |
Issuance of common shares for conversion of debt and accounts payable, shares | 4,417 | |||||||
Issuance of common shares for conversion of debt and accounts payable, amount | 49,161 | $ 0 | $ 0 | $ 0 | $ 0 | 49,161 | 0 | 0 |
Issuance of warrants to consultants | 2,385,000 | 0 | 0 | 0 | 0 | 2,385,000 | 0 | 0 |
Stock option expense | 68,693 | $ 0 | $ 0 | $ 0 | $ 0 | 68,693 | 0 | 0 |
Issuance of common Shares for warrant Exercise, shares | 599,427 | |||||||
Issuance of common Shares for warrant Exercise, amount | 0 | $ 60 | $ 0 | $ 0 | $ 0 | (60) | 0 | 0 |
Conversion of Series A into common stock, shares | 1,605,934 | (481,780) | ||||||
Conversion of Series A into common stock, amount | 0 | $ 161 | $ (48) | $ 0 | $ 0 | (113) | 0 | 0 |
Conversion of Series C into common stock, shares | 13,750 | (50,000) | ||||||
Conversion of Series C into common stock, amount | 0 | $ 1 | $ 0 | $ 0 | $ (5) | 4 | 0 | 0 |
Net loss | $ (10,065,620) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ (10,065,620) | $ 0 |
Balance, shares at Mar. 31, 2019 | 23,316,197 | |||||||
Balance, amount at Mar. 31, 2019 | $ 13,563,612 | $ 2,331 | $ 0 | $ 0 | $ 0 | $ 75,742,084 | $ (62,180,803) | $ 0 |
Balance, shares at Dec. 31, 2019 | 27,410,512 | |||||||
Balance, amount at Dec. 31, 2019 | (32,704,641) | $ 2,740 | $ 0 | $ 0 | $ 0 | 90,326,104 | (123,033,485) | 0 |
Net loss | (3,261,368) | 0 | 0 | 0 | 0 | 0 | (3,261,368) | 0 |
Issuance of Warrants in conjunction with Convertible Notes | 552,562 | 0 | 0 | 0 | 0 | 552,562 | 0 | 0 |
Amortization of Warrant and Option Expense | 0 | $ 0 | $ 0 | $ 0 | $ 0 | 115,025 | (115,025) | 0 |
Balance, shares at Mar. 31, 2020 | 27,410,512 | |||||||
Balance, amount at Mar. 31, 2020 | $ (35,413,447) | $ 2,740 | $ 0 | $ 0 | $ 0 | $ 90,993,691 | $ (126,409,878) | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows from Operating activities: | ||
Net loss | $ (3,261,368) | $ (10,065,620) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 915,052 | 816,916 |
Amortization of mining rights | 313,224 | 536,791 |
Accretion expense | 370,587 | 321,701 |
Reduction of ARO liability due to sale of assets | (312,338) | 0 |
Warrant expense | 115,025 | 2,385,000 |
Issuance of common shares for services | 0 | 1,672,200 |
Stock compensation expense | 0 | 68,693 |
Amortization of issuance costs and debt discount | 0 | 134,296 |
Recovery of previously impaired receivable | 0 | (50,806) |
Change in current assets and liabilities: | ||
Accounts receivable | 2,387,505 | 792,381 |
Prepaid expenses and other assets | (175,000) | (335,174) |
Inventory | 365,126 | (574,254) |
Funds held for others | 0 | 60,202 |
Accounts payable | 555,516 | (1,804,045) |
Accounts payable - related party | 85,446 | 104,467 |
Accrued interest | (506,383) | 193,826 |
Cash provided by (used in) operating activities | 852,392 | (5,743,426) |
Cash Flows from Investing activities: | ||
Cash paid for PPE, net | (408,915) | (721,444) |
Cash provided by (used in) investing activities | (408,915) | (721,444) |
Cash Flows from Financing activities: | ||
Principal payments on long term debt | (72,255) | (1,373,024) |
Proceeds from long term debt | 28,000 | 2,000,000 |
Payments on factoring agreement, net | (1,807,443) | (649,258) |
Proceeds from convertible note | 1,598,642 | 0 |
Proceeds from sale of common stock, net | 0 | 4,254,000 |
Cash provided by financing activities | (253,056) | 4,231,718 |
Increase (decrease) in cash and restricted cash | 190,421 | (2,233,152) |
Cash and restricted cash, beginning of period | 268,811 | 2,704,799 |
Cash and restricted cash, end of period | 459,232 | 471,647 |
Non-cash investing and financing activities | ||
Shares issued in asset acquisition | 0 | 24,400,000 |
Assumption of net assets and liabilities for asset acquisitions | 0 | 6,623,999 |
Discount on note due to beneficial conversion feature | 0 | 7,362,925 |
Conversion of trade payable to common shares | 0 | 231,661 |
Issuance of shares as part of note payable consideration | 0 | 297,831 |
Warrant exercise for common shares | 0 | 60 |
Return of shares related to employee settlement | 0 | 11 |
Conversion of Preferred Series A Shares to common shares | 0 | 161 |
Conversion of Preferred Series C Shares to common shares | 0 | 1 |
Cash paid for interest | 165,728 | 557,663 |
Cash paid for income taxes | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | American Resources Corporation (ARC or the Company) operates through subsidiaries that were acquired in 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 Quest Energy Inc (QEI), Deane Mining, LLC (Deane), Quest Processing LLC (Quest Processing), ERC Mining Indiana Corp (ERC), McCoy Elkhorn Coal LLC (McCoy), Knott County Coal LLC (KCC), Wyoming County Coal (WCC), Empire Kentucky Land, Inc, Colonial Coal Company, Inc. (Empire) and Perry County Resources LLC (PCR). All significant intercompany accounts and transactions have been eliminated. 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 months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or any other period. These financial statements should be read in conjunction with the Company’s 2019 audited financial statements and notes thereto which were filed on form 10-K on May 29, 2020. Going Concern: Convertible Preferred Securities: Derivatives and Hedging Activities We also follow ASC 480-10, Distinguishing Liabilities from Equity Cash Restricted cash: During the 2019 the Company established a reclamation bonding collateral fund. The balance of the restricted cash being held totaled $250,000 and $0 as of March 31, 2020 and December 31, 2019. 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 three months ended March 31, 2020 and March 31, 2019: March 31, 2020 March 31, 2019 Cash $ 43,745 $ 7 Restricted Cash 415,487 471,640 Total cash and restricted cash presented in the consolidated statement of cash flows $ 459,232 $ 471,647 Asset Acquisitions: On September 23, 2019, American Resources Corporation, (“Buyer”) entered into a binding agreement with Bear Branch Coal LLC, a Kentucky limited liability company, Perry County Coal LLC, a Kentucky limited liability company, Ray Coal LLC, a Kentucky limited liability company, and Whitaker Coal LLC, a Kentucky limited liability company (each a “Seller” and collectively, “Sellers”). The agreement was entered into as part of the bankruptcy proceedings of Cambrian Holding Company LLC, (“Cambrian), and is subject to approval by the United States Bankruptcy Court for the Eastern District of Kentucky (the “Bankruptcy Court”) in the chapter 11 bankruptcy cases of the Sellers, Case No. 19-51200(GRS), by entry of an order in form and substance acceptable to Sellers and Buyer (the “Sale Order). Under the agreement of the Sale Order, each Seller will sell, transfer, assign, convey and deliver to American Resources Corporation, effective as of the Closing, all assets, rights, titles, permits, leases, contracts and interests of such Seller free and clear of all liens, claims, interests and encumbrances, to the fullest extent permitted by the Bankruptcy Court. In consideration for the purchased assets, the Buyer will assume certain liabilities. Additionally, the Buyer will assume all liabilities relating to the transferred permits and the associated reclamation and post-mining liabilities of the purchased assets. On September 26, 2019, the Company received notice that a certain lease assumption as part of the PCR acquisition was being disputed by the lessor. As of the report date, the Company is in the process of transferring the permits. On September 27, 2019, PCR closed and acquired certain assets in exchange for assuming certain liabilities of Perry County Coal, LLC and a cash payment of $1. The preliminary fair values of the asset retirement obligation liabilities assumed were determined to be $2,009,181. Additional assumed liabilities total $3,036,987, of which $1,067,000 of the assumed liabilities are in negotiation as of the report date. The liabilities assumed do not require fair value readjustments. The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and a cash payment of $1, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of March 31, 2020 while the company continues to gather information, including evaluations of mining permits, discovery of assumed unsecured payables and timing and extent of end of mine life cost. The assets acquired and liabilities assumed of Perry County Coal, LLC were as follows at the purchase date: Assets Coal Inventory $ 659,331 Mine Development 524,268 Coal Refuse 179,522 Land 850,826 Equipment - Underground 873,161 Equipment - Surface 4,743 Processing and Loading Facility 1,954,317 Liabilities Reclamation liability $ 2,009,181 Accrued liabilities 3,036,987 On March 4, 2020, PCR entered into a sales agreement with an unrelated entity for three non-core permits which were acquired during the initial purchase on September 27, 2019. At the time of the purchase, PCR did not assign any value to the permits as they were not within the company’s plans to operate. The sale of the permits resulted in the release of $2,386,439 of reclamation bonds and $336,995 of asset retirement obligation liability. Consideration received was $700,000 in cash and $300,000 in equipment. The equipment has not been received as of the report date. The transaction resulted in a gain on sale of $1,061,225. Asset Retirement Obligations (ARO) – Reclamation: 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) deposits. 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. During the period ending March 31, 2020 and 2019, $- and $- were incurred for loss on settlement on ARO, respectively. The table below reflects the changes to our ARO: Balance at December 31, 2018 $ 18,538,009 Accretion – 3 months March 31, 2019 321,701 Reclamation work – 3 months March 31, 2019 - Balance at March 31, 2019 $ 18,859,710 Balance at December 31, 2019 $ 19,839,782 Accretion – 3 months March 31, 2020 370,587 Reclamation work – 3 months March 31, 2020 - Sale of PCR Permits (361,225 ) Balance at March 31, 2020 $ 19,849,144 Allowance For Doubtful Accounts: Allowance for trade receivables as of March 31, 2020 and December 31, 2019 amounted to $0, for both periods. Allowance for other accounts receivables as of March 31, 2020 and December 31, 2019 amounted to $0 and $0, respectively. Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of March 31, 2020 and December 31, 2019. Reclassifications: |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2020 | |
PROPERTY AND EQUIPMENT | |
NOTE 2 - PROPERTY AND EQUIPMENT | At March 31, 2020 and December 31, 2019, property and equipment were comprised of the following: March 31, 2020 December 31, 2019 Processing and rail facility $ 12,554,715 $ 12,723,163 Underground equipment 8,550,626 8,294,188 Surface equipment 3,136,906 3,224,896 Coal refuse storage 12,171,271 12,171,271 Mine Development 669,860 669,860 Land 1,748,169 907,193 Less: Accumulated depreciation (11,981,983 ) (11,162,662 ) Total Property and Equipment, Net $ 27,265,051 $ 27,668,855 Depreciation expense amounted to $915,052 and $816,916 for the periods March 31, 2020 and March 31, 2019, respectively. The estimated useful lives are as follows: Processing and Rail Facilities 7-20 years Surface Equipment 7 years Underground Equipment 5 years Mining Rights 5-10 years Coal Refuse Storage 10 years |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2020 | |
NOTES PAYABLE | |
NOTE 3 - NOTES PAYABLE | During the three-month period ended March 31, 2020, principal payments on long term debt totaled $72,255. During the three-month period ended March 31, 2020, increases to long term debt totaled $1,626,642, primarily from cash received in the form of a senior convertible note totaling $1,598,642. The notes have a minimum offering amount of $12,500,000 and maximum of $25,000,000 and minimum investment of $500,000. The notes carry a 24-month term, 12.5% interest 10% warrant coverage and a conversion price of $1.05. The warrants have an exercise price of $1.50. During the three-month period ended March 31, 2019, principal payments on long term debt totaled $1,373,024. During the three-month period ended March 31, 2019, increases to long term debt totaled $4,500,000, primarily from cash received in the form of $2,000,000 from the ARC development loan and $2,500,000 from seller financing for the acquisition of Empire. The ARC development loan carries annual interest at 5%, is due on April 1, 2020 and is secured by all company assets. The acquisition loan totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. During the three-month period ended March 31, 2020 proceeds from the factoring agreement totaled $0 and repayments according to the factoring agreement totaled $1,807,443. During the three-month period ended March 31, 2019 proceeds from the factoring agreement totaled $10,472,108, and repayments according to the factoring agreement totaled $11,121,366. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2020 | |
RELATED PARTY TRANSACTIONS | |
NOTE 4 - RELATED PARTY TRANSACTIONS | 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 March 31, 2020, royalty expense incurred with LRR amounted to $85,419 and amounts advanced from LRR amounted $932 and amounts repaid amounted to $905. For the three-month period ending March 31, 2019, royalty expense incurred with LRR amounted to $104,469 and amounts advanced from LRR amounted to $0 and amounts repaid to LRR amounted to $0. As of March 31, 2019, total amounts owed LRR amounted to $579,123. 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 3 months ended March 31, 2020 amounts incurred under the agreement amounted to $107,621 and amounts paid totaled $97,837. As of March 31, 2020, amounts payable under the agreement amounted to $9,784. For the 3 months ended March 31, 2020, service charges covering members of the Company’s management amounted to $0. |
EQUITY TRANSACTIONS
EQUITY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2020 | |
EQUITY TRANSACTIONS | |
NOTE 5 - EQUITY TRANSACTIONS | Employee stock compensation expense for the three-month period ending March 31, 2020 and 2019 amounted to $115,025 and $68,693 respectively. Warrant Modification On February 3 2020, we entered into a warrant adjustment agreement with Golden Properties Ltd., a British Columbia company based in Vancouver, Canada (“Golden Properties”) to amend warrants “C-1”, “C-2” “C-3”, and “C-4” that were originally part of a October 4, 2017 agreement with Golden Properties that involved a series of loans made by Golden Properties to the Company. As a result, the following warrants modified for Golden Properties: · Warrant C-1, for the purchase of 750,000 shares of common stock at $1.05 per share, as adjusted from time to time, expiring on January 31, 2023, and providing the Company with up to $787,500 in cash proceeds should all the warrants be exercised; · Warrant C-2, for the purchase of 750,000 shares of common stock at $1.05 per share, as adjusted from time to time, expiring on January 31, 2023, and providing the Company with up to $787,500 in cash proceeds should all the warrants be exercised; · Warrant C-3, for the purchase of 750,000 shares of common stock at $1.05 per share, as adjusted from time to time, expiring January 31, 2023, and providing the Company with up to $787,500 in cash proceeds should all the warrants be exercised; and · Warrant C-4, for the purchase of 750,000 shares of common stock at $1.05 per share, as adjusted from time to time, expiring January 31, 2023, and providing the Company with up to $787,500 in cash proceeds should all the warrants be exercised. New Warrant Issuances On February 3, 2020 Warrant C-5 was issued in connection to the conversion of $9,494,073 of outstanding debt into the senior convertible note. Warrant C-5 is for 949,407 warrant shares. The warrants carry an exercise price of $1.50 and an expiration date of February 3, 2023. On February 19, 2020 Warrant C-13 was issued in connection to purchase of $22,500 of the senior convertible notes. Warrant C-5 is for 2,250 warrant shares. The warrants carry an exercise price of $1.50 and an expiration date of April 1, 2022. On February 20, 2020 Warrant C-6 was issued in connection to purchase of $200,000 of the senior convertible notes. Warrant C-6 is for 20,000 warrant shares. The warrants carry an exercise price of $1.50 and an expiration date of February 20, 2022. The company uses the black Scholes option pricing model to value its warrants and options. The significant inputs are as follows: March 31, 2020 March 31, 2019 Expected Dividend Yield 0 % 0 % Expected volatility 123-617 % 87.97-109 % Risk-free rate 1.40-1.62% % 2.40-2.33 % Expected life of warrants 2.310-5.748 years 1.62 – 6.20 years Company Warrants: Weighted Weighted Average Average Aggregate Number of Exercise Contractual Intrinsic Warrants Price Life in Years Value Exercisable (Vested) – December 31, 2018 5,545,227 $ 2.745 1.704 $ 42,063,228 Granted 330,500 $ 2.206 4.106 $ 1,026,255 Forfeited or Expired - $ - - $ - Exercised 600,000 $ 0.010 1.688 $ 4,869,250 Outstanding - March 31, 2019 5,275,727 $ 2.867 1.620 $ 13,945,162 Exercisable (Vested) - March 31, 2019 5,275,727 $ 2.867 1.620 $ 13,945,162 Exercisable (Vested) – December 31, 2019 10,689,904 $ 1.856 2.310 $ 1,746,544 Granted 3,969,407 $ 1.160 2.596 $ - Forfeited or Expired 3,138,889 $ 4.452 1.21 $ 2,363,611 Exercised - $ - - $ - Outstanding - March 31, 2020 11,529,422 $ 0.892 2.751 $ 5,027,760 Exercisable (Vested) - March 31, 2020 11,529,422 $ 0.891 2.753 $ 5,027,760 Company Options: Weighted Weighted Average Average Aggregate Number of Exercise Contractual Intrinsic Options Price Life in Years Value Outstanding – December 31, 2018 681,830 $ 1.413 6.447 $ 405,000 Exercisable (Vested) – December 31, 2018 70,000 $ 4.214 4.247 $ 405,000 Granted - $ - - $ - Forfeited or Expired - $ - - $ - Exercised - $ - - $ - Outstanding - March 31, 2019 681,830 $ 1.330 6.200 $ 80,998 Exercisable (Vested) - March 31, 2019 70,000 $ 4.214 4.000 $ 80,998 Outstanding – December 31, 2019 1,056,830 $ 1.960 5.998 $ - Exercisable (Vested) – December 31, 2019 273,943 $ 1.821 5.072 $ - Granted - $ - - $ - Forfeited or Expired - $ - - $ - Exercised - $ - - $ - Outstanding - March 31, 2020 1,056,830 $ 1.960 5.748 $ 551,260 Exercisable (Vested) - March 31, 2020 273,943 $ 1.821 4.823 $ 58,287 |
CONTINGENCIES AND COMMITMENTS
CONTINGENCIES AND COMMITMENTS | 3 Months Ended |
Mar. 31, 2020 | |
CONTINGENCIES AND COMMITMENTS | |
NOTE 6 - 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 $1,228,790, the Company has accrued $2,251,057 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 $892,638 of which the Company has accrued $588,846 as a payable. During 2019, McCoy and Deane, received notice of intent to place liens for amounts owed on federal excise taxes. The amounts associated with the notices are included in the company’s trade payables. On November 7, 2018, Wyoming County Coal LLC, acquired 5 permits, coal processing and loading facilities, surface ownership, mineral ownership, and coal refuse storage facilities from unrelated entities. Consideration for the acquired assets was the assumption of reclamation bonds totaling $234,240, 1,727,273 shares of common stock of the company, a seller note of $350,000 and a seller note of $250,000. On September 20, 2019 Wyoming County received a Notice of Breach of the asset purchase agreement between WCC and Synergy Coal, LLC due to consideration of $225,000 not being paid, failure to file for permit transfers and pay delinquent transfer fees of $10,500 and other contract breaches, including failure to transfer reclamation surety bonds. WCC has paid the delinquent transfer fees and has filed for permit transfer. As a result of these steps, the seller notified us on May 17, 2020 that all breaches were cured. As of the balance sheet date and report date, the West Virginia permit transfers have not yet been approved, the seller has not been paid cash amounts due, and WCC has not substituted its reclamation surety bonds for the seller’s bond collateral. The Empire acquisition loan in conjunction with the Empire Kentucky Land merger totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. As of the balance sheet date the agreement was in default and the company received a breach of contract notice in September 2019. On May 8, 2020, the Company entered into a Settlement, Rescission and Mutual Release Agreement with the parties of the Empire acquisition. The agreement provides for the property of Empire to transfer back to the former parties for the return of 2,000,000 common shares of the Company and extinguishment $2,000,000 seller financing note. Additionally, permits and bonding liability associated with the Point Rock Mine were also transferred back to the original permit holders for the consideration of them assuming the reclamation liability. The default was cured on May 8, 2020 through the Settlement, Recission and Mutual Release Agreement. On April 3, 2019 KCC partially settled a case relating to a reclamation issue while the property was under former ownership. The settled amount is $100,000 which will be paid out of a prior insurance policy. The remaining portion of the case was settled during for amount of $280,000. The outstanding amount has not been paid as of the report date and is included in trade payables. On September 26, 2019, the Company received notice that a certain lease assumption as part of the PCR acquisition was being disputed by the lessor (see note 1). During January 2020, the Company and Sylva International LLC agreed to the termination of a digital marketing consulting services agreement that the Company had entered upon mutually acceptable terms. On March 1, 2020 the Company entered into an investor relations consulting contract with a non-related entity. The contract has a three month term, with $7,500 in cash due monthly and the issuance of 20,000 shares that fully vest over the three month term. The company leases various office space some from an entity which was consolidated as a variable interest entity until June 30, 2018 (see note 4). The rental lease for the Company’s former principal office space expired in December 31, 2018 and continued on a month-to-month basis until February 15, 2019. On February 14, the Company moved its principal offices to 12115 Visionary Way Fishers, IN 46038. A lease through December 2026 was executed. 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2020 | |
SUBSEQUENT EVENTS | |
NOTE 7 - SUBSEQUENT EVENTS | Empire Coal and Point Rock Settlement On May 8, 2020, the Company entered into a Settlement, Rescission and Mutual Release Agreement with the parties of the Empire acquisition. The agreement provides for the property of Empire to transfer back to the former parties for the return of 2,000,000 common shares of the Company and extinguishment $2,000,000 seller financing note. Additionally, permits and bonding liability associated with the Point Rock Mine were also transferred back to the original permit holders for the consideration of them assuming the reclamation liability. Common Stock Transactions On May 8, 2020, 2,000,000 common shares of the company were returned as part of the Empire Coal and Point Rock Settlement. See above. On April 1, 2020, 600,000 common shares of the company were issued as part of the settlement with ENCECo, Inc. See below. On May 26, 2020, 20,000 common shares of the company were issued as part of an investor relations contract. The contract, dated March 1, 2020 has a three month term, with $7,500 in cash due monthly and the issuance of 20,000 shares that fully vest over the three month term. The contract expired on June 1, 2020 and both parties are working together on renewal terms. Settlements into and Issuances of Senior Convertible Notes (See Note 6) Below are the transactions completed through the Senior Convertible Notes subsequent to the balance sheet date: The following issuance of Senior Convertible Notes: - April 1, 2020 – Issuance of $22,500 of notes for cash proceeds to an unrelated party The following notes and liabilities were converted or settled into the senior convertible notes: - April 1, 2020 - Libertas Funding LLC for the principal amount of $375,690 - April 1, 2020 - Wyoming County Seller Note for the principal amount of $225,000 - April 1, 2020 - Trade payable to Dominion Carbon Sales, LLC for the principal amount of $200,000 - April 1, 2020 - Trade payable to Calvin R. Tackett for the principal amount of $110,000 - April 1, 2020 - Interest and usage fees for the ENCECo, Inc. for the principal amount of $900,000 - April 1, 2020 - Coking Coal Financing, LLC for the principal amount of $1,888,444 - April 14, 2020 - Note with officers for the principal amount of $58,639 Promissory Note On April 21, 2020, the Company entered into a promissory note with Merchants Bank of Indiana for the amount of $2,649,800. The note accrues interest at 1% and is due April 1, 2022. Commencing October 21, 2020, payments of principal and interest are due on a repayment schedule of eighteen months. The promissory note was issued pursuant to the CARES Act and SBA’s Paycheck Protection Program. Warrant Conversion On June 11, 2020, the company received notice of exercise of 10,000 warrant shares of the Company pursuant to the August 27, 2019 Class A Common Stock and Warrant offering. The warrants converted at $1.05 per share and the company received $10,500 in cash consideration. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Consolidation | The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Quest Energy Inc (QEI), Deane Mining, LLC (Deane), Quest Processing LLC (Quest Processing), ERC Mining Indiana Corp (ERC), McCoy Elkhorn Coal LLC (McCoy), Knott County Coal LLC (KCC), Wyoming County Coal (WCC), Empire Kentucky Land, Inc, Colonial Coal Company, Inc. (Empire) and Perry County Resources LLC (PCR). All significant intercompany accounts and transactions have been eliminated. 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 months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or any other period. These financial statements should be read in conjunction with the Company’s 2019 audited financial statements and notes thereto which were filed on form 10-K on May 29, 2020. |
Going Concern | The Company has suffered recurring losses from operations and currently a working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. We plan to generate profits by expanding current coal operations as well as developing new coal operations. However, we will need to raise the funds required to do so through sale of our securities or through loans from third parties. We do not have any commitments or arrangements from any person to provide us with any additional capital. If additional financing is not available when needed, we may need to cease operations. We may not be successful in raising the capital needed to expand or develop operations. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty. |
Convertible Preferred Securities | We account for hybrid contracts that feature conversion options in accordance with generally accepted accounting principles in the United States. ASC 815, Derivatives and Hedging Activities We also follow ASC 480-10, Distinguishing Liabilities from Equity |
Cash | Cash |
Restricted cash | As part of the Kentucky New Markets Development Program (See Note 3) an asset management fee reserve was set up in the amount of $116,115. The funds are held to pay annual asset management fees to an unrelated party through 2021. The balance as of March 31, 2020 and December 31, 2019 was $47,987 and $47,987, respectively. The total balance of restricted cash also includes amounts held under the management agreement. See note 5. During the 2019 the Company established a reclamation bonding collateral fund. The balance of the restricted cash being held totaled $250,000 and $0 as of March 31, 2020 and December 31, 2019. 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 three months ended March 31, 2020 and March 31, 2019: March 31, 2020 March 31, 2019 Cash $ 43,745 $ 7 Restricted Cash 415,487 471,640 Total cash and restricted cash presented in the consolidated statement of cash flows $ 459,232 $ 471,647 |
Asset Acquisition | On September 23, 2019, American Resources Corporation, (“Buyer”) entered into a binding agreement with Bear Branch Coal LLC, a Kentucky limited liability company, Perry County Coal LLC, a Kentucky limited liability company, Ray Coal LLC, a Kentucky limited liability company, and Whitaker Coal LLC, a Kentucky limited liability company (each a “Seller” and collectively, “Sellers”). The agreement was entered into as part of the bankruptcy proceedings of Cambrian Holding Company LLC, (“Cambrian), and is subject to approval by the United States Bankruptcy Court for the Eastern District of Kentucky (the “Bankruptcy Court”) in the chapter 11 bankruptcy cases of the Sellers, Case No. 19-51200(GRS), by entry of an order in form and substance acceptable to Sellers and Buyer (the “Sale Order). Under the agreement of the Sale Order, each Seller will sell, transfer, assign, convey and deliver to American Resources Corporation, effective as of the Closing, all assets, rights, titles, permits, leases, contracts and interests of such Seller free and clear of all liens, claims, interests and encumbrances, to the fullest extent permitted by the Bankruptcy Court. In consideration for the purchased assets, the Buyer will assume certain liabilities. Additionally, the Buyer will assume all liabilities relating to the transferred permits and the associated reclamation and post-mining liabilities of the purchased assets. On September 26, 2019, the Company received notice that a certain lease assumption as part of the PCR acquisition was being disputed by the lessor. As of the report date, the Company is in the process of transferring the permits. On September 27, 2019, PCR closed and acquired certain assets in exchange for assuming certain liabilities of Perry County Coal, LLC and a cash payment of $1. The preliminary fair values of the asset retirement obligation liabilities assumed were determined to be $2,009,181. Additional assumed liabilities total $3,036,987, of which $1,067,000 of the assumed liabilities are in negotiation as of the report date. The liabilities assumed do not require fair value readjustments. The assets acquired do not represent a business as defined in FASB AS 805-10-20 due to their classification as a single asset. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed and a cash payment of $1, including direct acquisition costs, of which there were none. The cost is allocated to the group of assets acquired based on their relative fair value. Because the transaction closed near the end of the reporting quarter the values assigned are provisional as of March 31, 2020 while the company continues to gather information, including evaluations of mining permits, discovery of assumed unsecured payables and timing and extent of end of mine life cost. The assets acquired and liabilities assumed of Perry County Coal, LLC were as follows at the purchase date: Assets Coal Inventory $ 659,331 Mine Development 524,268 Coal Refuse 179,522 Land 850,826 Equipment - Underground 873,161 Equipment - Surface 4,743 Processing and Loading Facility 1,954,317 Liabilities Reclamation liability $ 2,009,181 Accrued liabilities 3,036,987 On March 4, 2020, PCR entered into a sales agreement with an unrelated entity for three non-core permits which were acquired during the initial purchase on September 27, 2019. At the time of the purchase, PCR did not assign any value to the permits as they were not within the company’s plans to operate. The sale of the permits resulted in the release of $2,386,439 of reclamation bonds and $336,995 of asset retirement obligation liability. Consideration received was $700,000 in cash and $300,000 in equipment. The equipment has not been received as of the report date. The transaction resulted in a gain on sale of $1,061,225. |
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) deposits. 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. During the period ending March 31, 2020 and 2019, $- and $- were incurred for loss on settlement on ARO, respectively. The table below reflects the changes to our ARO: Balance at December 31, 2018 $ 18,538,009 Accretion – 3 months March 31, 2019 321,701 Reclamation work – 3 months March 31, 2019 - Balance at March 31, 2019 $ 18,859,710 Balance at December 31, 2019 $ 19,839,782 Accretion – 3 months March 31, 2020 370,587 Reclamation work – 3 months March 31, 2020 - Sale of PCR Permits (361,225 ) Balance at March 31, 2020 $ 19,849,144 |
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 March 31, 2020 and December 31, 2019 amounted to $0, for both periods. Allowance for other accounts receivables as of March 31, 2020 and December 31, 2019 amounted to $0 and $0, respectively. Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of March 31, 2020 and December 31, 2019. |
Reclassifications | Reclassifications have been made to conform with current year presentation. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Schedule of restricted cash and cash equivalents | March 31, 2020 March 31, 2019 Cash $ 43,745 $ 7 Restricted Cash 415,487 471,640 Total cash and restricted cash presented in the consolidated statement of cash flows $ 459,232 $ 471,647 |
Schedule of Asset Retirement Obligations | Balance at December 31, 2018 $ 18,538,009 Accretion – 3 months March 31, 2019 321,701 Reclamation work – 3 months March 31, 2019 - Balance at March 31, 2019 $ 18,859,710 Balance at December 31, 2019 $ 19,839,782 Accretion – 3 months March 31, 2020 370,587 Reclamation work – 3 months March 31, 2020 - Sale of PCR Permits (361,225 ) Balance at March 31, 2020 $ 19,849,144 |
Perry County Coal, LLC [Member] | |
Schedule of assets acquired and liabilities assumed | Assets Coal Inventory $ 659,331 Mine Development 524,268 Coal Refuse 179,522 Land 850,826 Equipment - Underground 873,161 Equipment - Surface 4,743 Processing and Loading Facility 1,954,317 Liabilities Reclamation liability $ 2,009,181 Accrued liabilities 3,036,987 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
PROPERTY AND EQUIPMENT | |
Schedule of property, plant and equipment | March 31, 2020 December 31, 2019 Processing and rail facility $ 12,554,715 $ 12,723,163 Underground equipment 8,550,626 8,294,188 Surface equipment 3,136,906 3,224,896 Coal refuse storage 12,171,271 12,171,271 Mine Development 669,860 669,860 Land 1,748,169 907,193 Less: Accumulated depreciation (11,981,983 ) (11,162,662 ) Total Property and Equipment, Net $ 27,265,051 $ 27,668,855 |
Schedule of property, plant and equipment, estimated useful lives | Processing and Rail Facilities 7-20 years Surface Equipment 7 years Underground Equipment 5 years Mining Rights 5-10 years Coal Refuse Storage 10 years |
EQUITY TRANSACTIONS (Tables)
EQUITY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
EQUITY TRANSACTIONS | |
Schedule of Stockholders' Equity Note, Warrants | March 31, 2020 March 31, 2019 Expected Dividend Yield 0 % 0 % Expected volatility 123-617 % 87.97-109 % Risk-free rate 1.40-1.62% % 2.40-2.33 % Expected life of warrants 2.310-5.748 years 1.62 – 6.20 years |
Schedule of assumptions used to messure fair value of warrants/rights | Company Warrants: Weighted Weighted Average Average Aggregate Number of Exercise Contractual Intrinsic Warrants Price Life in Years Value Exercisable (Vested) – December 31, 2018 5,545,227 $ 2.745 1.704 $ 42,063,228 Granted 330,500 $ 2.206 4.106 $ 1,026,255 Forfeited or Expired - $ - - $ - Exercised 600,000 $ 0.010 1.688 $ 4,869,250 Outstanding - March 31, 2019 5,275,727 $ 2.867 1.620 $ 13,945,162 Exercisable (Vested) - March 31, 2019 5,275,727 $ 2.867 1.620 $ 13,945,162 Exercisable (Vested) – December 31, 2019 10,689,904 $ 1.856 2.310 $ 1,746,544 Granted 3,969,407 $ 1.160 2.596 $ - Forfeited or Expired 3,138,889 $ 4.452 1.21 $ 2,363,611 Exercised - $ - - $ - Outstanding - March 31, 2020 11,529,422 $ 0.892 2.751 $ 5,027,760 Exercisable (Vested) - March 31, 2020 11,529,422 $ 0.891 2.753 $ 5,027,760 Company Options: Weighted Weighted Average Average Aggregate Number of Exercise Contractual Intrinsic Options Price Life in Years Value Outstanding – December 31, 2018 681,830 $ 1.413 6.447 $ 405,000 Exercisable (Vested) – December 31, 2018 70,000 $ 4.214 4.247 $ 405,000 Granted - $ - - $ - Forfeited or Expired - $ - - $ - Exercised - $ - - $ - Outstanding - March 31, 2019 681,830 $ 1.330 6.200 $ 80,998 Exercisable (Vested) - March 31, 2019 70,000 $ 4.214 4.000 $ 80,998 Outstanding – December 31, 2019 1,056,830 $ 1.960 5.998 $ - Exercisable (Vested) – December 31, 2019 273,943 $ 1.821 5.072 $ - Granted - $ - - $ - Forfeited or Expired - $ - - $ - Exercised - $ - - $ - Outstanding - March 31, 2020 1,056,830 $ 1.960 5.748 $ 551,260 Exercisable (Vested) - March 31, 2020 273,943 $ 1.821 4.823 $ 58,287 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Cash | $ 43,745 | $ 3,324 | $ 7 |
Restricted Cash | 415,487 | $ 265,487 | 471,640 |
Total cash and restricted cash presented in the consolidated statement of cash flows | $ 459,232 | $ 471,647 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Equipment - Underground | $ 8,550,626 | $ 8,294,188 |
Liabilities | ||
Reclamation liability | 2,327,169 | 2,327,169 |
Accrued liabilities | 2,363,380 | $ 2,869,763 |
Perry County Coal, LLC [Member] | ||
Assets | ||
Coal Inventory | 659,331 | |
Mine Development | 524,268 | |
Coal Refuse | 179,522 | |
Land | 850,826 | |
Equipment - Underground | 873,161 | |
Equipment - Surface | 4,743 | |
Processing and Loading Facility | 1,954,317 | |
Liabilities | ||
Reclamation liability | 2,009,181 | |
Accrued liabilities | $ 3,036,987 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Beginning Balance | $ 19,839,782 | $ 18,538,009 |
Accretion | 370,587 | 321,701 |
Reclamation work | 0 | |
Sale of PCR Permits | (361,225) | 0 |
Ending Balance | $ 19,849,144 | $ 18,859,710 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Restricted cash | $ 47,987 | $ 47,987 | |
Loss on settlement on ARO | 0 | $ 0 | |
Asset management fee reserve | 116,115 | ||
Allowance for trade receivables | 0 | 0 | |
Allowance for other accounts receivables | 0 | 0 | |
Collateral fund, cash restricted | 250,000 | 0 | |
Cash received | 43,745 | $ 7 | $ 3,324 |
Perry County Resources LLC (PCR) [Member] | March 4, 2020 [Member] | |||
Reclamation bond | 2,386,439 | ||
Retirement obligations | 336,995 | ||
Cash received | 700,000 | ||
Equipment received (as payment) | 300,000 | ||
Gain on sale of permits | 1,061,225 | ||
Perry County Resources LLC (PCR) [Member] | September 27, 2019 [Member] | Assets Acquisition [Member] | |||
Cash received | 1 | ||
Fair value of assumed liability | 2,009,181 | ||
Assumed liability - Total | 3,036,987 | ||
Negotiable assumed liability | $ 1,067,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Less Accumulated Depreciation | $ (11,981,983) | $ (11,162,622) |
Total Property and Equipment, Net | 27,265,051 | 27,668,855 |
Underground equipment [Member] | ||
Property and equipment | 8,550,626 | 8,294,188 |
Surface equipment [Member] | ||
Property and equipment | 3,136,906 | 3,224,896 |
Mine development [Member] | ||
Property and equipment | 669,860 | 669,860 |
Processing and rail facilities [Member] | ||
Property and equipment | 12,554,715 | 12,723,163 |
Coal refuse storage [Member] | ||
Property and equipment | 12,171,271 | 12,171,271 |
Land [Member] | ||
Property and equipment | $ 1,748,169 | $ 907,193 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details 1) | 3 Months Ended |
Mar. 31, 2020 | |
Surface equipment [Member] | |
Estimated useful lives | 7 years |
Underground equipment [Member] | |
Estimated useful lives | 5 years |
Minimum [Member] | Mining Rights [Member] | |
Estimated useful lives | 5 years |
Maximum [Member] | Mining Rights [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 |
Coal Refuse Storage [Member] | |
Estimated useful lives | 10 years |
PROPERTY AND EQUIPMENT (Detai_3
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
PROPERTY AND EQUIPMENT | ||
Depreciation expense | $ 915,052 | $ 816,916 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Principal payments on long term debt | $ 72,255 | $ 1,373,024 |
Description of Notes and loan payable | The notes have a minimum offering amount of $12,500,000 and maximum of $25,000,000 and minimum investment of $500,000. The notes carry a 24-month term, 12.5% interest 10% warrant coverage and a conversion price of $1.05. The warrants have an exercise price of $1.50. | The acquisition loan totaling $2,500,000 is due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property. |
Proceeds from long term debt | $ 28,000 | $ 2,000,000 |
Increases to long term debt | 1,626,642 | 4,500,000 |
Proceeds from convertible notes | 1,598,642 | 0 |
Proceeds from the factoring agreement | 0 | 10,472,108 |
Payments on factoring agreement, net | $ 1,807,443 | 11,121,366 |
ARC Development Loan [Member] | ||
Proceeds from long term debt | $ 2,000,000 | |
Annual interest rate | 5.00% | |
Due date | Apr. 1, 2020 | |
Seller Financing [Member] | ||
Proceeds from long term debt | $ 2,500,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Royalty expense | $ 160,230 | $ 1,259,586 |
LRR [Member] | ||
Royalty expense | 85,419 | 104,469 |
Proceeds from related party | 932 | 0 |
Repayment of related party | 905 | 0 |
Due to related party | 0 | $ 579,123 |
Contract Services Agreement [Member] | Land Betterment Corporation [Member] | ||
Service charges | 107,621 | |
Service charges paid | 97,837 | |
Amount payable as service charges | $ 9,784 | |
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. | |
Management service charges | $ 0 |
EQUITY TRANSACTIONS (Details)
EQUITY TRANSACTIONS (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Expected Dividend Yield | 0.00% | 0.00% |
Minimum [Member] | ||
Expected volatility | 123.00% | 87.97% |
Risk-free rate | 1.40% | 2.33% |
Expected life of warrants | 2 years 3 months 22 days | 1 year 7 months 13 days |
Maximum [Member] | ||
Expected volatility | 617.00% | 109.00% |
Risk-free rate | 1.62% | 2.40% |
Expected life of warrants | 5 years 8 months 30 days | 6 years 2 months 12 days |
EQUITY TRANSACTIONS (Detail 1)
EQUITY TRANSACTIONS (Detail 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Aggregate Intrinsic Value [Member] | ||
Beginning Exercisable (Vested) weighted Average Intrinsic value | $ 1,746,544 | $ 42,063,228 |
Granted | 0 | 1,026,255 |
Forfeited or Expired | 2,363,611 | 0 |
Exercised | 0 | 4,869,250 |
Ending Balance Intrinsic value | 5,027,760 | 13,945,162 |
Beginning Exercisable (Vested) weighted Average Intrinsic value | $ 5,027,760 | $ 13,945,162 |
Weighted Average Contractual Life in Years [Member] | ||
Beginning Exercisable (Vested) weighted Average | 2 years 3 months 22 days | 1 year 8 months 12 days |
Granted | 2 years 7 months 2 days | 4 years 1 month 6 days |
Forfeited or Expired | 1 year 2 months 16 days | |
Exercised | 1 year 8 months 9 days | |
Outstanding Balance Weighted Average | 2 years 8 months 30 days | 1 year 7 months 13 days |
Ending Exercisable (Vested) weighted Average | 2 years 8 months 30 days | 1 year 7 months 13 days |
Weighted Average Exercise Price [Member] | ||
Exercisable (Vested) beginning Exercise | $ 1.856 | $ 2.745 |
Granted | 1.160 | 2.206 |
Forfeited or Expired | 4.452 | 0 |
Exercised | 0 | 0.010 |
Exercise price, Outstanding | 0.892 | 2.867 |
Exercisable (Vested) beginning Exercise | $ 0.891 | $ 2.867 |
Warrants [Member] | ||
Exercisable (Vested), Warrants, Outstanding beginning | 10,689,904 | 5,545,227 |
Granted | 3,969,407 | 330,500 |
Forfeited or Expired | 3,138,889 | 0 |
Exercised | 0 | 600,000 |
Warrant Outstanding, ending balance | 11,529,422 | 5,275,727 |
Exercisable (Vested), Warrants, Outstanding ending | 11,529,422 | 5,275,727 |
EQUITY TRANSACTIONS (Detail 2)
EQUITY TRANSACTIONS (Detail 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Aggregate Intrinsic Value [Member] | ||
Outstanding Balance Intrinsic | $ 0 | $ 405,000 |
Beginning Exercisable Intrinsic | 0 | 405,000 |
Granted | 0 | 0 |
Forfeited or Expired | 0 | 0 |
Exercised | 0 | 0 |
Ending Balance Intrinsic value, total | 551,260 | 80,998 |
Ending Exercisable Intrinsic | $ 58,287 | $ 80,998 |
Weighted Average Contractual Life in Years [Member] | ||
Outstanding Balance Weighted Average | 5 years 11 months 26 days | 6 years 5 months 12 days |
Exerisable beginning weighted average | 5 years 25 days | 4 years 2 months 30 days |
Granted | ||
Forfeited or Expired | ||
Exercised | ||
Ending Balance Weighted Average | 5 years 8 months 30 days | 6 years 2 months 12 days |
Exercisable Ending Weighted Average | 4 years 9 months 25 days | 4 years |
Weighted Average Exercise Price [Member] | ||
Beginning Outstanding Exercise | $ 1.960 | $ 1.413 |
Weighted average exercise price, Exercisable (Vested), Beginning balance | 1.821 | 4.214 |
Granted | 0 | 0 |
Forfeited or Expired | 0 | 0 |
Exercised | 0 | 0 |
Ending Outstanding Exercise Price | 1.960 | 1.330 |
Weighted average exercise price, Exercisable (Vested), Ending balance | $ 1.821 | $ 4.214 |
Options [Member] | ||
Options, Outstanding, Begining Balance | 1,056,830 | 681,830 |
Options, Exercisable (Vested), Beginning balance | 273,943 | 70,000 |
Granted | 0 | 0 |
Forfeited or Expired | 0 | 0 |
Exercised | 0 | 0 |
Options, Exercisable (Vested), Beginning balance | 273,943 | 70,000 |
Options, Outstanding, Ending Balance | 1,056,830 | 681,830 |
EQUITY TRANSACTIONS (Details Na
EQUITY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Feb. 20, 2020 | Feb. 19, 2020 | Feb. 03, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Stock based compensation expense | $ 115,025 | $ 68,693 | |||
Warrant C-6 [Member] | |||||
Debt conversion, converted instrument | $ 200,000 | ||||
Exercise price | $ 1.50 | ||||
Expiration date | Feb. 20, 2022 | ||||
Warrant issued | 20,000 | ||||
Warrant C-13 [Member] | |||||
Shares issued upon debt conversion | 22,500 | ||||
Warrant C-5 [Member] | |||||
Debt conversion, converted instrument | $ 9,494,073 | ||||
Exercise price | $ 1.50 | $ 1.50 | |||
Expiration date | Apr. 1, 2022 | ||||
Warrant issued | 949,407 | ||||
Maturity date | Feb. 3, 2023 | ||||
Warrant exercised | 2,250 | ||||
Warrant C-4 [Member] | GoldenProperties Ltd. [Member] | |||||
Maturity date | Jan. 31, 2023 | ||||
Common stock, shares issuable | 750,000 | ||||
Price per share | $ 1.05 | ||||
Future value of shares issuable | $ 787,500 | ||||
Warrant C-3 [Member] | GoldenProperties Ltd. [Member] | |||||
Maturity date | Jan. 31, 2023 | ||||
Common stock, shares issuable | 750,000 | ||||
Price per share | $ 1.05 | ||||
Future value of shares issuable | $ 787,500 | ||||
Warrant C-2 [Member] | GoldenProperties Ltd. [Member] | |||||
Maturity date | Jan. 31, 2023 | ||||
Common stock, shares issuable | 750,000 | ||||
Price per share | $ 1.05 | ||||
Future value of shares issuable | $ 787,500 | ||||
Warrant C-1 [Member] | GoldenProperties Ltd. [Member] | |||||
Maturity date | Jan. 31, 2023 | ||||
Common stock, shares issuable | 750,000 | ||||
Price per share | $ 1.05 | ||||
Future value of shares issuable | $ 787,500 |
CONTINGENCIES (Details Narrativ
CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Sep. 20, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | May 08, 2020 | Dec. 31, 2019 | Nov. 07, 2018 | |
Rent payment, monthly | $ 500 | |||||
Frequency of periodic payment | Month-to-month | |||||
Annual rent maturity date | Oct. 30, 2021 | |||||
Proceeds from issuance of shares, monthly | $ 0 | $ 4,254,000 | ||||
Gain on reclamation settlement | 0 | $ 0 | ||||
Accrued payable | 2,363,380 | $ 2,869,763 | ||||
Kentucky Energy Cabinet [Member] | ||||||
Claims amounts | 1,228,790 | |||||
Kentucky Energy Cabinet [Member] | Commonwealth of Kentucky [Member] | ||||||
Accrued payable | 2,251,057 | |||||
Mutual Release Agreement [Member] | Subsequent Event [Member] | ||||||
Return of common stock shares issued | 2,000,000 | |||||
Extinguishment of financing note | $ 2,000,000 | |||||
Empire Kentucky [Member] | ||||||
Acquisition of assets | 2,500,000 | |||||
Upfront due amount | $ 500,000 | |||||
Debt description | Due with $500,000 upfront and $2,000,000 due through a $1 per ton royalty off the coal sold from the acquired property and is secured by the underlying property | |||||
KCC [Member] | ||||||
Gain on reclamation settlement | $ (100,000) | |||||
Trades payable | 280,000 | |||||
Mine Health Safety [Member] | ||||||
Accrued payable | 588,846 | |||||
Claims amounts | $ 892,638 | |||||
Wyoming County Coal LLC [Member] | ||||||
Reclamation bonds amount | $ 234,240 | |||||
Reclamation bonds shares | 1,727,273 | |||||
Breach of contract, amount | $ 225,000 | |||||
Transfer fees | $ 10,500 | |||||
Wyoming County Coal LLC [Member] | Seller Note Two [Member] | ||||||
Seller note | $ 250,000 | |||||
Wyoming County Coal LLC [Member] | Seller Note One [Member] | ||||||
Seller note | $ 350,000 | |||||
Consulting contract [Member] | ||||||
Stock Issued During Period, Shares, New Issues | 20,000 | |||||
Proceeds from issuance of shares, monthly | $ 7,500 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Jun. 11, 2020 | May 26, 2020 | May 08, 2020 | Apr. 21, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Proceeds from issuance of warrant | $ 552,562 | |||||
Stock Issued During Period, Value, New Issues | $ 4,254,000 | |||||
Subsequent Event [Member] | ||||||
Warrant exercised | 10,000 | |||||
Proceeds from issuance of warrant | $ 10,500 | |||||
Subsequent Event [Member] | Empire Coal [Member] | ||||||
Stock Repurchased During Period, Shares | 2,000,000 | |||||
Subsequent Event [Member] | Empire Coal and Point Rock [Member] | Rescission and Mutual Release Agreement [Member] | ||||||
Stock Repurchased During Period, Shares | 2,000,000 | |||||
Extinguishment of debt | $ 2,000,000 | |||||
Subsequent Event [Member] | Investor Relations Contract [Member] | ||||||
Stock Issued During Period, Shares, New Issues | 20,000 | |||||
Stock Issued During Period, Value, New Issues | $ 7,500 | |||||
Description of shares issued | The issuance of 20,000 shares that fully vest over the three month term. The contract expired on June 1, 2020 and both parties are working together on renewal terms. | |||||
Subsequent Event [Member] | Officers [Member] | April 14, 2020 [Member] | ||||||
Convertible debt, principal amount | 58,639 | |||||
Subsequent Event [Member] | Coking Coal Financing LLC [Member] | April 1, 2020 [Member] | ||||||
Convertible debt, principal amount | 1,888,444 | |||||
Subsequent Event [Member] | ENCECo, Inc. [Member] | April 1, 2020 [Member] | ||||||
Convertible debt, principal amount | $ 900,000 | |||||
Common stock shares issued | 600,000 | |||||
Subsequent Event [Member] | Calvin R.Tackett [Member] | April 1, 2020 [Member] | ||||||
Convertible debt, principal amount | $ 110,000 | |||||
Subsequent Event [Member] | Dominion Carbon Sales, LLC [Member] | April 1, 2020 [Member] | ||||||
Convertible debt, principal amount | 200,000 | |||||
Subsequent Event [Member] | Wyoming Country Seller [Member] | April 1, 2020 [Member] | ||||||
Convertible debt, principal amount | 225,000 | |||||
Subsequent Event [Member] | Libertas Funding LLC [Member] | April 1, 2020 [Member] | ||||||
Convertible debt, principal amount | 375,690 | |||||
Subsequent Event [Member] | Unrelated Party [Member] | April 1, 2020 [Member] | ||||||
Proceeds from issuance of convertible note | $ 22,500 | |||||
Subsequent Event [Member] | Merchants Bank of Indiana [Member] | ||||||
Promissory note | $ 2,649,800 | |||||
Interest rate | 1.00% | |||||
Maturity date | Apr. 1, 2022 |