Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2018 | |
Document and Entity Information: | |
Entity Registrant Name | American Resources Corporation |
Entity Central Index Key | 1,590,715 |
Document Type | S-1/A |
Document Period End Date | Sep. 30, 2018 |
Amendment Flag | true |
Amendment Description | To update financials. |
Current Fiscal Year End Date | --12-31 |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Ex Transition Period | false |
Entity Emerging Growth Company | true |
Document Fiscal Year Focus | 2,018 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | |||
Cash | $ 57,739 | $ 186,722 | $ 784,525 |
Accounts Receivable | 2,801,040 | 1,870,562 | 2,753,199 |
Inventory | 426,725 | 615,096 | 0 |
Prepaid fees | 147,826 | 0 | 0 |
Accounts Receivable - Other | 102,994 | 30,021 | 199,701 |
Total Current Assets | 3,536,324 | 2,702,401 | 3,737,425 |
OTHER ASSETS | |||
Cash - restricted | 286,043 | 198,943 | 141,102 |
Processing and rail facility | 2,802,855 | 2,914,422 | 2,914,422 |
Underground equipment | 9,346,692 | 8,887,045 | 7,500,512 |
Surface equipment | 4,532,724 | 3,957,603 | 3,751,054 |
Mining rights (net of amortization of $181,385 and $0) | 2,036,567 | 0 | 0 |
Less Accumulated Depreciation | (6,600,108) | (4,820,569) | (2,262,855) |
Land | 0 | 178,683 | 178,683 |
Accounts Receivable - Other | 0 | 127,718 | 196,347 |
Note Receivable | 4,117,139 | 4,117,139 | 4,117,139 |
Total Other Assets | 16,521,912 | 15,560,984 | 16,536,404 |
TOTAL ASSETS | 20,058,236 | 18,263,385 | 20,273,829 |
CURRENT LIABILITIES | |||
Accounts payable | 6,813,924 | 5,360,537 | 2,196,060 |
Accrued management fee | 0 | 17,840,615 | 17,840,615 |
Accrued interest | 624,209 | 336,570 | 122,945 |
Accrued dividend on Series B | 104,157 | 0 | 0 |
Funds held for others | 63,767 | 82,828 | 24,987 |
Due to affiliate | 636,378 | 124,000 | 74,000 |
Current portion of long term-debt (net of issuance costs and debt discount) | 14,625,099 | 9,645,154 | 4,431,006 |
Current portion of reclamation liability | 2,275,848 | 2,033,862 | 519,489 |
Total Current Liabilities | 25,143,382 | 35,423,566 | 25,209,102 |
OTHER LIABILITIES | |||
Long-term portion of note payable (net of issuance costs) | 5,072,493 | 5,081,688 | 4,964,941 |
Reclamation liability | 20,289,527 | 17,851,195 | 17,607,384 |
Total Other Liabilities | 25,362,020 | 22,932,883 | 22,572,325 |
Total Liabilities | 50,505,402 | 58,356,449 | 47,781,427 |
STOCKHOLDERS' DEFICIT | |||
Additional paid-in capital | 19,816,567 | 1,527,254 | 88,193 |
Accumulated deficit | (50,265,183) | (42,019,595) | (27,651,030) |
Total American Resources Corporation's Shareholders' Deficit | (30,447,166) | (40,490,920) | (27,562,355) |
Non controlling interest | 0 | 397,856 | 54,757 |
Total Stockholders' Deficit | (30,447,166) | (40,093,064) | (27,507,598) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 20,058,236 | 18,263,385 | 20,273,829 |
Class A Common stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
Common stock, value | 118 | 89 | 0 |
Series A Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
Preferred stock, value | 482 | 482 | 482 |
Series B Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
Preferred stock, value | 850 | 850 | $ 0 |
Series C Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
Preferred stock, value | $ 0 | $ 0 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
OTHER ASSETS | |||
Mining rights net of amortization | $ 181,385 | $ 0 | $ 0 |
CURRENT LIABILITIES | |||
Long term-debt net of issuance costs and debt discount | 387,442 | 35,000 | 0 |
OTHER LIABILITIES | |||
Note payable net of issuance costs | $ 420,293 | $ 440,333 | $ 451,389 |
Class A Common stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
Common Stock, Par Value | $ .0001 | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 230,000,000 | 230,000,000 | 230,000,000 |
Common Stock, Shares Issued | 1,192,044 | 892,044 | 0 |
Common Stock, Shares Outstanding | 1,192,044 | 892,044 | 0 |
Series A Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
Preferred Stock, Par Value | $ .0001 | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 4,817,792 | 4,817,792 | 4,817,792 |
Preferred Stock, Shares Outstanding | 4,817,792 | 4,817,792 | 4,817,792 |
Series B Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
Preferred Stock, Par Value | $ .001 | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred Stock, Shares Issued | 850,000 | 850,000 | 850,000 |
Preferred Stock, Shares Outstanding | 850,000 | 850,000 | 850,000 |
Series C Preferred Stock [Member] | |||
STOCKHOLDERS' DEFICIT | |||
Preferred Stock, Par Value | $ .0001 | $ 0.0001 | |
Preferred Stock, Shares Authorized | 20,000,000 | 20,000,000 | |
Preferred Stock, Shares Issued | 0 | 0 | |
Preferred Stock, Shares Outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements Of Operations | ||||||
Coal Sales | $ 8,890,322 | $ 4,192,244 | $ 23,219,222 | $ 13,770,183 | $ 19,231,249 | $ 5,345,145 |
Processing Services Income | 147,946 | 159,724 | 167,462 | 1,563,864 | 1,589,749 | 2,256,049 |
Total Revenue | 9,038,268 | 4,351,968 | 23,386,684 | 15,334,047 | 20,820,998 | 7,601,194 |
Cost of Coal Sales and Processing | (6,690,698) | (2,797,140) | (16,783,801) | (12,307,399) | (16,344,567) | (8,961,653) |
Accretion Expense | (539,771) | (339,288) | (1,435,295) | (1,181,055) | (1,791,051) | (1,664,774) |
Loss on settlement | 0 | (30,055) | 0 | (281,907) | 0 | (71,245) |
Depreciation | (649,983) | (697,214) | (1,779,539) | (1,856,442) | (2,557,714) | (2,262,855) |
Amortization of mining rights | (181,385) | 0 | (181,385) | 0 | 0 | 0 |
General and Administrative | (1,142,522) | (26,940) | (2,175,794) | (189,604) | (1,378,111) | (237,601) |
Professional Fees | (784,922) | (144,712) | (1,222,937) | (565,995) | (694,366) | (391,659) |
Consulting Fees - Related Party | 0 | 0 | 0 | 0 | 0 | (12,340,615) |
Production Taxes and Royalties | (1,041,667) | (865,950) | (2,769,584) | (3,464,611) | (4,974,013) | (1,250,365) |
Impairment Loss from notes receivable from related party | 0 | 0 | 0 | 0 | (250,000) | (510,902) |
Development Costs | (2,188,833) | (1,035,286) | (5,908,207) | (4,172,759) | (6,850,062) | (1,760,594) |
Total Expenses from Operations | (13,219,781) | (5,936,585) | (32,256,542) | (24,019,772) | (34,839,884) | (29,452,263) |
Net Loss from Operations | (4,181,513) | (1,584,617) | (8,869,858) | (8,685,725) | (14,018,886) | (21,851,069) |
Other Income | 875,942 | 67,844 | 1,295,065 | 309,418 | 343,100 | 54,757 |
Gain on cancelation of debt | 0 | 0 | 315,000 | 0 | 0 | 0 |
Receipt of previously impaired receivable | 0 | 117,657 | 92,573 | 241,574 | 387,427 | 0 |
Amortization of debt discount and debt issuance costs | (420,134) | (284,406) | (477,056) | (9,406) | ||
Interest Income | 0 | 0 | 41,171 | 0 | 298,721 | 0 |
Interest expense | (305,655) | (342,683) | (864,104) | (567,970) | (558,772) | (283,564) |
Net Loss | (3,611,226) | (1,741,799) | (7,990,153) | (8,702,703) | (14,025,466) | (22,089,282) |
Less: Series B dividend requirement | (17,000) | 0 | (104,157) | 0 | (53,157) | 0 |
Less: Net income attributable to Non Controlling Interest | 0 | (67,844) | (151,278) | (309,418) | (343,099) | (54,757) |
Net loss attributable to American Resources Corporation Shareholders | $ (3,628,226) | $ (1,809,643) | $ (8,245,588) | $ (9,012,121) | $ (14,421,722) | $ (22,144,039) |
Net loss per share - basic and diluted | $ (2.49) | $ (2.03) | $ (8.76) | $ (11.87) | $ (18.20) | $ 0 |
Weighted average shares outstanding | 1,038,783 | 891,180 | 941,495 | 759,397 | 792,391 | 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS OF EQUITY - USD ($) | Common Stock | Preferred Stock A | Preferred Stock B | Additional Paid-In Capital | Retained Earnings | Non-Controlling Interest | Total |
Beginning Balance, Shares at Dec. 31, 2015 | 0 | 2,550,430 | 0 | ||||
Beginning Balance, Amount at Dec. 31, 2015 | $ 0 | $ 0 | $ 0 | $ 0 | $ (5,506,991) | $ 0 | $ (5,506,991) |
Stock-based compensation, Shares | 2,267,362 | ||||||
Stock-based compensation, Amount | $ 482 | 88,193 | 88,675 | ||||
Beneficial conversion feature | 0 | ||||||
Net loss | (22,144,039) | 54,757 | (22,089,282) | ||||
Ending Balance, Shares at Dec. 31, 2016 | 0 | 4,817,792 | 0 | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 0 | $ 482 | $ 0 | 88,193 | (27,651,030) | 54,757 | (27,507,598) |
Stock-based compensation, Amount | 40,000 | 40,000 | |||||
Recapitalization, Shares | 845,377 | ||||||
Recapitalization, Amount | $ 85 | (85) | 0 | ||||
Sale of Preferred Series B Stock, Shares | 850,000 | ||||||
Sale of Preferred Series B Stock, Amount | $ 850 | 849,150 | 850,000 | ||||
Conversion of Debt, Shares | 33,334 | ||||||
Conversion of Debt, Amount | $ 3 | 49,997 | 50,000 | ||||
Beneficial conversion feature | 50,000 | 50,000 | |||||
Issuance of shares to consultant, Shares | 13,333 | ||||||
Issuance of shares to consultant, Amount | $ 1 | 9,999 | 10,000 | ||||
Relative fair value debt discount on warrants issued | 440,000 | 440,000 | |||||
Net loss | (14,358,565) | 343,099 | (14,025,466) | ||||
Ending Balance, Shares at Dec. 31, 2017 | 892,044 | 4,817,792 | 850,000 | ||||
Ending Balance, Amount at Dec. 31, 2017 | $ 89 | $ 482 | $ 850 | $ 1,527,254 | $ (42,019,595) | $ 397,856 | (40,093,064) |
Beneficial conversion feature | 0 | ||||||
Net loss | (7,990,153) | ||||||
Ending Balance, Amount at Sep. 30, 2018 | $ (30,447,166) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating activities: | ||||
Net loss | $ (7,990,153) | $ (8,702,703) | $ (14,025,466) | $ (22,089,282) |
Adjustments to reconcile net income (loss) to net cash | ||||
Depreciation | 1,779,539 | 1,856,442 | 2,557,714 | 2,262,855 |
Amortization of mining rights | 181,385 | 0 | 0 | 0 |
Accretion expense | 1,435,295 | 1,181,055 | 1,791,051 | 1,664,774 |
Cancelation of debt | (315,000) | 0 | 0 | 0 |
Loss on reclamation settlements | 0 | 281,907 | 0 | 71,245 |
Assumption of note payable in reverse merger | 0 | 50,000 | 50,000 | 0 |
Gain on disposition | (807,591) | 0 | ||
Recovery of previously impaired receipts | (92,573) | (241,574) | (387,427) | 510,902 |
Amortization of debt discount | 420,134 | 284,406 | 477,056 | 9,406 |
Warrant expense | 234,067 | 0 | 0 | 0 |
Option expense | 13,410 | 0 | 0 | 0 |
Impairment of related party note receivable | 0 | 0 | 250,000 | 0 |
Stock compensation expense | 201,250 | 10,000 | 50,000 | 88,675 |
Change in current assets and liabilities: | ||||
Accounts receivable | (930,478) | 2,123,881 | 882,637 | (2,753,199) |
Inventory | 188,371 | 0 | (615,096) | 0 |
Prepaid expenses and other assets | (147,826) | 0 | 0 | 920 |
Restricted cash used to pay interest expense | 0 | 0 | 14,981 | 13,984 |
Accounts payable | 973,057 | 2,824,351 | 3,096,351 | 2,196,060 |
Funds held for others | (19,061) | 0 | 0 | 0 |
Due to affiliates | 512,378 | 0 | 0 | 0 |
Accrued expenses | 0 | 0 | 0 | 12,340,615 |
Accrued interest | 287,639 | 90,000 | 213,625 | 122,945 |
Reclamation liability settlements | 0 | (709,132) | 0 | (256,892) |
Cash used in operating activities | (4,076,157) | (951,367) | (5,644,574) | (5,816,992) |
Cash Flows from Investing activities: | ||||
Note receivable | 0 | 0 | 0 | (4,117,139) |
Increase in restricted cash | 0 | 0 | (57,841) | (116,115) |
Restricted cash used to pay down debt | 0 | 0 | 65,604 | 54,421 |
Advances made in connection with management agreement | (99,582) | (75,000) | (77,800) | (1,845,902) |
Advance repayment in connection with management agreement | 222,304 | 469,645 | 625,227 | 1,175,000 |
Cash paid for PPE, net | (127,957) | (176,597) | (173,432) | (34,200) |
Cash received from acquisitions, net of $0 and $100 cash paid | 0 | 0 | 0 | 5,315,700 |
Cash (used in) provided by investing activities | (5,235) | 218,048 | 381,758 | 431,765 |
Cash Flows from Financing activities: | ||||
Principal payments on long term debt | (2,064,902) | (318,576) | (392,002) | (303,706) |
Proceeds from long term debt | 5,316,977 | 1,670,000 | 4,440,000 | 4,857,391 |
Proceeds from related party | 0 | 50,000 | 50,000 | |
Net proceeds from (payments to) factoring agreement | 787,434 | (1,521,577) | (32,985) | 1,616,067 |
Proceeds from sale of series B preferred equity | 0 | 600,000 | 0 | 0 |
Proceeds from private placements | 0 | 0 | 600,000 | 0 |
Cash provided by financing activities | 4,039,509 | 479,847 | 4,665,013 | 6,169,752 |
(Decrease) increase in cash and restricted cash | (41,883) | (253,472) | (597,803) | 784,525 |
Cash and restricted cash, beginning of period | 385,665 | 784,525 | 784,525 | |
Cash and restricted cash, end of period | 343,782 | 531,053 | 385,665 | 784,525 |
Cash, beginning of year | 186,722 | 784,525 | 784,525 | 0 |
Cash, end of year | 186,722 | 784,525 | ||
Non-cash investing and financing activities | ||||
Assumption of net assets and liabilities for asset acquisitions | 2,217,952 | 0 | 0 | 2,745,582 |
Equipment for notes payable | 906,660 | 1,222,500 | 1,419,650 | 904,425 |
Purchase of related party note receivable in exchange for Series B Equity | 0 | 250,000 | 250,000 | 0 |
Preferred Series B Dividends | 104,157 | 0 | 0 | 0 |
Affiliate note for equipment | 0 | 0 | 0 | 63,000 |
Conversion of note payable to common stock | 0 | 50,000 | 50,000 | 0 |
Beneficial conversion feature on note payable | 0 | 50,000 | 50,000 | 0 |
Forgiveness of accrued management fee | 17,840,615 | 0 | 0 | 0 |
Relative fair value debt discount on warrant issue | 0 | 300,000 | 440,000 | 0 |
Cash paid for interest | 156,331 | 193,564 | 345,147 | 160,619 |
Cash paid for income taxes | $ 0 | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | American Resources Corporation (ARC or the Company) operates through subsidiaries that were acquired in 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 for the nine months ended September 30, 2018 and 2017 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) and Knott County Coal LLC (KCC). All significant intercompany accounts and transactions have been eliminated. As of July 1, 2018, the accounts of Land Resources & Royalties, LLC have been deconsolidated from the financial statements based upon the ongoing review of its status as a variable interest entity. On August 23, 2018, KCC disposed of certain non-operating assets totaling $111,567 and the corresponding asset retirement obligation totaling $919,158 which resulted in a gain of $807,591. 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 nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or any other period. These financial statements should be read in conjunction with the Company’s 2017 audited financial statements and notes thereto which were filed on Form 10K on April 23, 2018. Going Concern: Convertible Preferred Securities: Derivatives and Hedging Activities We also follow ASC 480-10, Distinguishing Liabilities from Equity Cash Restricted cash: The balance as of September 30, 2018 and December 31, 2017 was $286,043 and $198,943, respectively. 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 nine months ended September 30, 2018 and September 30, 2017. September 30, 2018 September 30, 2017 Cash $ 57,739 $ 342,041 Restricted Cash 286,043 189,012 Total cash and restricted cash presented in the consolidated statement of cash flows $ 343,782 $ 531,053 Asset Acquisitions: On April 21, 2018, McCoy acquired certain assets known as the Point Rock Mine (Point Rock) in exchange for assuming certain liabilities of the seller. The fair values of the liabilities assumed were $53,771 for prior vendors and $2,098,052 for asset retirement obligation totaling $2,151,823. The liabilities assumed do not require fair value readjustments. In addition, McCoy entered into a surface and mineral sub-lease in the amount of up to $4,000,000 to be paid only upon coal extraction at $2 per extracted ton of coal. McCoy will also pay a portion of the sales price as a royalty with an annual minimum payment of $60,000 starting in January 2019. The acquired assets have an anticipated life of 5 years. Capitalized mining rights will be amortized based on productive activities over the anticipated life of 5 years. Amortization expense for the 3 months ended September 30, 2018 and 2017 amounted to $179,318 and $0, respectively. The assets will be measured for impairment when an event occurs that questions the realization of the recorded value. The assets acquired of Point Rock 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, 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. The assets acquired and liabilities assumed of Point Rock were as follows at the purchase date: Assets Mining Rights $ 2,151,823 Liabilities Vendor Payables $ 53,771 Asset Retirement Obligation $ 2,098,052 On May 10, 2018, KCC acquired certain assets known as the Wayland Surface Mine (Wayland) in exchange for assuming certain liabilities of the seller. The fair values of the liabilities assumed were $66,129 for asset retirement obligation. The liabilities assumed do not require fair value readjustments. In addition, KCC entered into a royalty agreement with the seller to be paid only upon coal extraction in the amount of $1.50 per extracted ton of coal. The acquired assets have an anticipated life of 7 years. Capitalized mining rights will be amortized based on productive activities over the anticipated life of 7 years. Amortization expense for the 3 months ended September 30, 2018 and 2017 amounted to $2,067 and $0, respectively. The assets will be measured for impairment when an event occurs that questions the realization of the recorded value. The assets acquired of Wayland 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, 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. The assets acquired and liabilities assumed of Wayland were as follows at the purchase date: Assets Mining Rights $ 66,129 Liabilities Asset Retirement Obligation $ 66,129 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) 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. During the periods ending September 30, 2018 and 2017, $0 and $281,907 were incurred for loss on settlement on ARO, respectively. The table below reflects the changes to our ARO: Balance at December 31, 2017 $ 19,885,057 Accretion – nine months September 30, 2018 1,435,295 Reclamation work – nine months September 30, 2018 (0 ) Asset disposition (919,158 ) Point Rock Acquisition 2,098,052 Wayland Acquisition 66,129 Balance at September 30, 2018 $ 22,565,375 Allowance For Doubtful Accounts: Allowance for trade receivables as of September 30, 2018 and December 31, 2017 amounted to $0, for both periods. Allowance for other accounts receivables as of September 30, 2018 and December 31, 2017 amounted to $0 and $92,573, respectively. Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of September 30, 2018 and December 31, 2017. Reclassifications: New Accounting Pronouncements: - ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities - ASU 2016-02, Leases - ASU 2017-09, Compensation – Stock Compensation, - ASU 2017-11, Earnings Per Share, - ASU 2018-05, Income Taxes, - ASU 2018-07, Compensation-Stock Compensation (Topic 718), Management has elected to early adopt ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ASU 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230). ASU 2014-09, Revenue from Contracts with Customers (Topic 606). | American Resources Corporation (ARC or the Company) operates through subsidiaries that were acquired in 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) and Knott County Coal LLC (KCC). All significant intercompany accounts and transactions have been eliminated. On January 5, 2017, QEI entered into a share exchange agreement with NGFC Equities, Inc (NGFC). Under the agreement, the shareholders of QEI exchanged 100% of its common stock to NGFC for 4,817,792 newly created Series A Preferred shares that is convertible into approximately 95% of outstanding common stock of NGFC. The previous NGFC shareholders retained 845,377 common shares as part of the agreement. The conditions to the agreement were fully satisfied on February 7, 2017, at which time the Company took full control of NGFC. NGFC has been renamed to American Resources Corporation (ARC). The transaction was accounted for as a recapitalization. QEI was the accounting acquirer and ARC will continue the business operations of QEI, therefore, the historical financial statements presented are those of QEI and its subsidiaries. The equity and share information reflect the results of the recapitalization. On May 15, 2017 ARC initiated a one-for-thirty reverse stock split. The financial statements have been retrospectively restated to give effect to this split. 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 Company is the primary beneficiary of ERC Mining, LLC, which qualifies as a variable interest entity. Accordingly, the assets, liabilities, revenue and expenses of ERC Mining, LLC have been included in the accompanying consolidated financial statements. The Company has no ownership in ERC Mining, LLC. Determination of the Company as the primary beneficiary is based on the power through its management functions to direct the activities that most significantly impact the economic performance of ERC Mining, LLC. On March 18, 2016, the company lent ERC Mining, LLC $4,117,139 to facilitate the transaction described in Note 6, which represent amounts that could be significant to ERC. No further support has been provided. The Company has ongoing involvement in the management of ERC Mining, LLC to ensure their fulfillment of the transaction described in Note 6. The Company is the primary beneficiary of Land Resources & Royalties LLC (LRR) which qualifies as a variable interest entity. Accordingly, the assets, liabilities, revenue and expenses of Land Resources & Royalties have been included in the accompanying consolidated financial statements. The Company has no ownership in LRR. Determination of the Company as the primary beneficiary is based on the power through its management functions to direct the activities that most significantly impact the economic performance of LRR. On October 24, 2016, the company issued LRR a note in the amount of $178,683 to facilitate the transaction described in Note 5, which represent amounts that could be significant to LRR. No further support has been provided. The Company has ongoing involvement in the management of LRR to ensure their fulfillment of the transaction described in Note 5. Deane was formed in November 2007 for the purpose of operating underground coal mines and coal processing facilities. Deane was acquired on December 31, 2015 and as such no operations are presented prior to the acquisition date. Quest P ERC was formed in April 2015 for the purpose managing an underground coal mine and coal processing facility. Operations commenced in June 2015. McCoy was formed in February 2016 for the purpose of operating underground coal mines and coal processing facilities. The assets of McCoy were acquired on February 17, 2016 and as such no operations are presented prior to the acquisition date. KCC was formed in September 2004 for the purpose of operating underground coal mines and coal processing facilities. KCC was acquired on April 14, 2016 and as such no operations are presented prior to the acquisition date. On February 17, 2016, McCoy Elkhorn Coal LLC (McCoy) acquired certain assets in exchange for $100 and for assuming certain liabilities of Fortress Resources, LLC. The fair values of the asset retirement obligation liabilities assumed were determined to be $3,561,848 respectively. The liabilities assumed do not require fair value readjustments. The assets acquired of McCoy do not represent a business as defined in FASB AS 805-10-20. McCoy does not have an integrated set of activities and assets that that is capable of being conducted and managed for the purpose of providing a return or other economic benefit to their investors, members or participants. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed, 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. The assets acquired and liabilities assumed of McCoy were as follows at the purchase date: Assets Cash $ 2,935,800 Underground Mining Equipment 531,249 Surface Mining Equipment 36,218 Coal Preparation and Loading Facilities 58,681 Liabilities Asset Retirement Obligation $ 3,561,848 On April 14, 2016, the Company acquired 100% of the membership interests of ICG Knott County, LLC, subsequently renamed Knott County Coal LLC. The fair values of the asset retirement obligation liabilities assumed were determined to be $4,499,434 respectively. The liabilities assumed do not require fair value readjustments. The assets acquired of ICG Knott County do not represent a business as defined in FASB AS 805-10-20. IGC Knott County does not have an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return or other economic benefit to their investors, members or participants. Accordingly, the assets acquired and liabilities assumed are initially recognized at the consideration paid, including direct acquisition costs. The cost is allocated to the group of assets acquired and liabilities assumed based on their relative fair value. The assets and liabilities assumed of ICG Knott County were as follows on the purchase date: Assets Cash $ 2,380,000 Underground Mining Equipment 1,533,937 Surface Mining Equipment 206,578 Land 178,683 Coal Preparation and Loading Facilities 200,236 Liabilities Asset Retirement Obligation $ 4,499,434 As a result of the KCC and McCoy acquisitions during 2016, $8,061,282 of ARO was assumed for net cash of $5,315,700 and property, equipment and land of $2,745,582. Going Concern: Estimates: Convertible Preferred Securities: Derivatives and Hedging Activities We also follow ASC 480-10, Distinguishing Liabilities from Equity Related Party Policies: Advance Royalties: Cash As of December 31, 2017 and 2016 total cash, including restricted cash, amounted to $385,665 and $925,627, respectively. Restricted cash as of December 31, 2017 and 2016 amounted to $198,943 and $141,102, respectively. Restrictions to cash include funds held for the benefit other parties in the amount of $82,828 and $24,987 as of December 31, 2017 and 2016, respectively. The use of these funds are in conjunction with the management of the property owned by this party and the duration of the restrictions matches the duration of the management agreement. (See Note 7) 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. (See Note 6) Concentration: Coal Property and Equipment Property and equipment and amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net undiscounted cash flows expected to be generated by the related assets. If these assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. Costs related to maintenance and repairs which do not prolong the asset’s useful life are expensed as incurred. Mine Development: 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 coal deposits. We are using a discount rate of 10%, risk free rate of .23% and inflation rate of 1.5%. 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 2017 and 2016, $0 and $71,245 were incurred for loss on settlement on ARO. The table below reflects the changes to our ARO: 2017 2016 Beginning Balance $ 18,126,873 $ 8,586,464 Accretion 1,791,051 1,664,774 Reclamation work (32,867 ) (185,647 ) McCoy Acquisition - 3,561,848 KCC Acquisition - 4,499,434 Ending balance $ 19,885,057 $ 18,126,873 Current portion of reclamation liability $ 2,033,862 $ 519,489 Long-term portion of reclamation liability $ 17,851,195 $ 17,607,384 Income Taxes The Company filed an initial tax return in 2015. Management believes that the Company’s income tax filing positions will be sustained on audit and does not anticipate any adjustments that will result in a material change. Therefore, no reserve for uncertain income tax positions has been recorded. The Company’s policy for recording interest and penalties, if any, associated with income tax examinations will be to record such items as a component of income taxes. Revenue Recognition: Our revenue is comprised of sales of mined coal and services for processing coal. All of the activity is undertaken in eastern Kentucky. We recognize revenue from coal sales at the time risk of loss passes to the customer at contracted amounts and amounts are deemed collectible. Revenue from coal processing and loading are recognized when services have been performed according to the contract in place. Leases: The Company leases certain equipment and other assets under noncancelable operating leases, typically with initial terms of 3 to 7 years. Minimum rent on operating leases is expensed on a straight-line basis over the term of the lease. In addition to minimum rental payments, certain leases require additional payments based on sales volume, as well as reimbursement of real estate taxes, which are expensed when incurred. Capital leases are recorded at the present value of the future minimum lease payments at the inception of the lease. The gross amount of assets recorded under capital lease amounted to $333,875, all of which is classified as surface equipment. Loan Issuance Costs and Discounts Allowance For Doubtful Accounts: Allowance for trade receivables as of December 31, 2017 and 2016 amounted to $0 and $0, respectively. Allowance for other accounts receivables as of December 31, 2017 and 2016 amounted to $92,573 and $640,000, respectively. Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of December 31, 2017 and 2016. Inventory: Stock-based Compensation: Earnings Per Share: For the years ended December 31, 2017 and 2016, the Company had 5,364,230 and 0 outstanding stock warrants, respectively. For the years ended December 31, 2017 and 2016, the Company did not have any restrictive stock awards, restricted stock units, or performance-based awards. Reclassifications: New Accounting Pronouncements: ● Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers ● ASU 2015-11, Simplifying the Measurement of Inventory ● ASU 2015-17, Balance Sheet Classification of Deferred Taxes ● ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities ● ASU 2016-02, Leases ● ASU 2016-18, Statement of Cash Flows: Restricted Cash, ● ASU 2017-01, Business Combinations, ● AUS 2017-09, Compensation – Stock Compensation, ● ASU 2017-11, Earnings Per Share, ● ASU 2018-05, Income Taxes, Management has elected to early adopt ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ASU 2014-09, Revenue from Contracts with Customers (Topic 606). |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
PROPERTY AND EQUIPMENT | At September 30, 2018 and December 31, 2017, property and equipment were comprised of the following: September 30, 2018 December 31, 2017 Processing and rail facility $ 2,802,855 $ 2,914,422 Underground equipment 9,346,692 8,887,045 Surface equipment 4,532,724 3,957,603 Mining rights (Less: accumulated amortization of $181,385) 2,036,567 - Land - 178,683 Less: Accumulated depreciation (6,600,108 ) (4,820,569 ) Total Property and Equipment, Net $ 12,118,730 $ 11,117,184 Depreciation expense amounted to $649,983 and $697,214 for the three month periods September 30, 2018 and September 30, 2017, respectively. Depreciation expense amounted to $1,779,539 and $1,856,442 for the nine month periods September 30, 2018 and September 30, 2017, respectively. The estimated useful lives are as follows: Processing and Rail Facilities 20 years Surface Equipment 7 years Underground Equipment 5 years Mining Rights 5 years | At December 31, 2017 and 2016, property and equipment were comprised of the following: 2017 2016 Processing and rail facility $ 2,914,422 $ 2,914,422 Underground equipment 8,887,045 7,500,512 Surface equipment 3,957,603 3,751,054 Land 178,683 178,683 Less: Accumulated depreciation (4,820,569 ) (2,262,855 ) Total Property and Equipment, Net $ 11,117,184 $ 12,081,816 Depreciation expense amounted to $2,557,714 and $2,262,855 for the years of December 31, 2017 and 2016, respectively. The estimated useful lives are as follows: Processing and Rail Facilities 20 years Surface Equipment 7 years Underground Equipment 5 years |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
NOTES PAYABLE | The net increase in debt includes the following: Total debt balance as of December 31, 2017 $ 14,726,842 During the nine-month period ended September 30, 2018, $2,450 ,000 was drawn from the ARC business loan which carries annual interest at 7%, is due within two months of advancement and is secure by all company assets. On June 4, 2018, $30,000 and September 28, 2018, $75,000 of this note was repaid. 2,450,000 On January 25, 2018, QEI entered into an equipment loan agreement with an unrelated party in the amount of $346,660. The agreement calls for monthly payments of $11,360 until maturity date of December 24, 2020 and carries an interest rate of 9%. The loan is secured by the underlying surface equipment purchased by the loan. Loan proceeds were used directly to purchase equipment. 346,660 On March 28, 2018, QEI entered into an equipment loan agreement with an unrelated party in the amount of $135,000. The agreement called for payments of $75,000 and $60,000 are due on April 6, 2018 and April 13, 2018, respectively, at which date the note was repaid in full. Loan proceeds were used directly to purchase equipment. 135,000 On May 9, 2018, QEI entered into a loan agreement with an unrelated party in the amount of $1,000,000 with a maturity date of September 24, 2018 with monthly payments of $250,000 due beginning June 15, 2018. The note is secured by the assets and equity of the company and carries an interest rate of 0%. Proceeds of the note were split between receipt of $575,000 cash and $425,000 payment for new equipment. No payments have been made on the note which is in default. 1,000,000 During May 2018, the company entered into a financing arrangement with two unrelated parties. The notes totaled $2,859,500, carried an original issue discount of $752,535, interest rate of 33% and have a maturity date of January 2019 and are secured by future receivables as well as personal guarantees of two officers of the company. 2,963,958 During the nine-month period ended September 30, 2018 net additions to the factoring agreement totaled $787,435. 787,435 Total increases to debt 7,683,053 Less cash payments (2,064,902 ) In May 2018, an unrelated party forgave $315,000 of the $540,000 equipment loan agreement dated September 30, 2016. (315,000 ) Issuance discount (752,535 ) Amortization of issuance cost and loan discounts 420,134 Ending debt balance at September 30, 2018 $ 19,697,592 Less current portion: $ 14,625,099 Total long term debt at September 30, 2018 $ 5,072,493 | During the year ended December 31, 2017 and 2016, principal payments on long term debt totaled $392,002 and $303,706, respectively. During the year ended December 31, 2017 and 2016, new debt issuances totaled $5,909,650 and $5,824,816, respectively, primarily from $4,490,000 of working capital loans and $1,419,650 of equipment loans in 2017 and $4,688,152 from the Kentucky New Markets Development program and $967,425 in equipment loans in 2016. (See Note 5). During the year ended December 31, 2017 and 2016, net proceeds from our factoring agreement totaled $32,985 and $1,616,067, respectively. During the year ended December 31, 2017 and 2016, discounts on debt issued amounted to $490,000 and $-, respectively related to the ARC business loan discussed below and the note payable discussed in note 9. During 2017 and 2016, $455,000 and $- was amortized into expense with $35,000 and $- remaining as unamortized discount. Long-term debt consisted of the following at December 31, 2017 and 2016: 2017 2016 Equipment Loans - QEI Note payable to an unrelated company in monthly installments of $2,064, with interest at 8.75%, through maturity in March 2019, when the note is due in full. The note is secured by equipment and a personal guarantee by an officer of the Company. $ 30,962 $ 50,235 Note payable to an unrelated company in monthly installments of $1,468, With interest at 6.95%, through maturity in March 2021, when the note is due in full. The note is secured by equipment and a personal guarantee by an officer of the Company 57,290 64,175 On September 8, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, to purchase certain underground mining equipment for $600,000. The agreement provided for $80,000 paid upon execution, $30,000 monthly payments until the balance is paid in full. 460,000 0 On October 19, 2017, Quest entered into an equipment financing agreement with an unaffiliated entity, to purchase certain surface equipment for $90,400. The agreement calls for monthly payments until maturity of October 19, 2019 and interest of 9.95%. 88,297 0 On October 20, 2017, Quest entered into an equipment financing agreement with an unaffiliated entity, to purchase certain surface equipment for $50,250. The agreement calls for monthly payments until maturity of October 20, 2019 and interest of 10.60%. 51,320 0 On December 4, 2017, Quest entered into an equipment financing agreement with an unaffiliated entity, to purchase certain surface equipment for $56,900. The agreement calls for monthly payments until maturity of January 7, 2021. 56,900 0 Business Loan - ARC On October 4, 2017, ARC entered into a consolidated loan agreement with an unaffiliated entity. $5,444,632 has been advanced under the note. $1,300,000 of the note was advanced after December 31, 2017. The agreement calls for interest of 7% and with all outstanding amounts due on demand. The note is secured by all assets of Quest and subsidiaries. In conjunction with the loan, a warrants for up to 5,017,006 common shares were issued at an exercise price ranging from $.01 to $11.44 per share and with an expiration date of October 2, 2020. The loan consolidation was treated as a loan modification for accounting purposes giving rise to a discount of $140,000. The discount was amortized over the life of the loan with $105,000 included as interest expense and $35,000 included as a note discount as of December 31, 2017. 4,444,632 175,000 Equipment Loans – ERC Equipment lease payable to an unrelated company in 48 equal payments of $771 with an interest rate of 5.25% with a balloon payment at maturity of June 30, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 7. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. 27,288 35,644 Equipment lease payable to an unrelated company in 48 equal payments of $3,304 with an interest rate of 5.25% with a balloon payment at maturity of June 30, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 7. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. 128,254 161,738 Equipment lease payable to an unrelated company in 48 equal payments of $2,031 with an interest rate of 5.25% with a balloon payment at maturity of August 13, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 7. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. 36,890 60,541 Equipment Loans - McCoy Equipment note payable to an unrelated company, with monthly payments of $150,000 in September 2016, October 2016, November 2016 and a final payment of $315,000 due in December 2016. No extensions have been entered into subsequent to December 31, 2017 resulting in the note being in default. 540,000 540,000 On May 2, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $250,000. Full payment was due September 12, 2017. 135,000 0 On June 12, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $22,500. Full payment was due September 12, 2017. 22,500 0 On September 25, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $350,000. The agreement provided for $20,000 monthly payments until the balance is paid in full. 330,000 0 Business Loans - McCoy Business loan agreement with Crestmark Bank in the amount of $200,000, with monthly payments of 23,000, with an interest rate of 12%, through maturity in January 1, 2018. The note is secured by a corporate guaranty by the Company and a personal guaranty. 66,667 0 Seller Note - Deane Deane Mining - promissory note payable to an unrelated company, with monthly interest payments of $10,000, at an interest rate of 6%, beginning June 30, 2016. The note is due December 31, 2017. No payments have been made on the note and no extensions have been entered into subsequent to December 31, 2017, resulting in the note being in default. 2,000,000 2,000,000 Accounts Receivable Factoring Agreement McCoy, Deane and Knott County secured accounts receivable note payable to a bank. The agreement calls for interest of .30% for each 10 days of outstanding balances. The advance is secured by the accounts receivable, corporate guaranty by the Company and personal guarantees by two officers of the Company. The agreement ends in October 2018 1,582,989 1,616,167 Kentucky New Markets Development Program Quest Processing - loan payable to Community Venture Investment XV, LLC, with interest only payments due quarterly until March 2023, at which time quarterly principal and interest payments are due. The note bears interest at 3.698554% and is due March 7, 2046. The loan is secured by all equipment and accounts of Quest Processing. See Note 4,117,139 4,117,139 Quest Processing - loan payable to Community Venture Investment XV, LLC, with interest only payments due quarterly until March 2023, at which time quarterly principal and interest payments are due. The note bears interest at 3.698554% and is due March 7, 2046. The loan is secured by all equipment and accounts of Quest Processing. See Note 1,026,047 1,026,047 Less: Debt Discounts and Loan Issuance Costs (475,333 ) (451,389 ) Affiliate Notes Notes payable to affiliate, due on demand with no interest and is uncollateralized. Equipment purchasing was paid by an affiliate resulting in the note payable. $ 74,000 $ 74,000 During July 2017, an officer of the Company advanced $50,000 to Quest. The advance is unsecured, non interest bearing and due on demand. $ 50,000 $ 0 14,850,842 9,469,947 Less: Current maturities 9,769,154 4,505,006 Total Long-term Debt $ 5,081,688 $ 4,964,941 Total interest expense was $558,772 in 2017 and $283,564 in 2016. Future minimum principal payments, interest payments and payments on capital leases are as follows: Payable In Loan Principal Lease Principal Total Loan and Lease Principal Lease Interest 2018 9,704,444 64,710 9,769,154 8,560 2019 312,707 125,798 438,505 3,722 2020 37,283 - 37,283 - 2021 10,491 - 10,491 - 2022 - - - - Thereafter 4,595,409 4,595,409 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
RELATED PARTY TRANSACTIONS | On June 12, 2015, the Company executed a consulting agreement with an entity with common ownership. No fees or repayments have occurred during the nine-month period September 30, 2018 and 2017, respectively. The amount outstanding and payable as of September 30, 2018 and December 31, 2017, was $0 and $17,840,615, respectively. The amount was due on demand and did not accrue interest. The amounts under the agreement were cancelled and forgiven on May 31, 2018. The forgiveness was accounted for as an increase in additional paid in capital. On April 30, 2017, the Company purchased $250,000 of secured debt that had been owed to a third party, by an operating subsidiary of a related party. As a result of the transaction, the Company is now the creditor on the notes. The first note in the amount of $150,000 is dated March 13, 2013, carries an interest rate of 12% and was due on September 13, 2015. The second note in the amount of $100,000 is dated July 17, 2013, carries an interest rate of 12% and was due January 17, 2016. Both notes are in default and have been fully impaired due to collectability uncertainty. During the three month period ended September 30, 2018, the Company incurred royalty expense in the amount of $64,537 to a related entity formally consolidated as a variable interest entity. As of September 30, 2018 the company owed the related entity a total of $512,378 for unpaid royalties and advances. | On June 12, 2015, the Company executed a consulting agreement with an entity with common ownership. During 2017 and 2016, the Company incurred fees totaling $0 and $12,340,615, respectively, relating to services rendered under this agreement. The amount outstanding and payable as of December 31, 2017 and 2016, was $17,840,615 and $17,840,615, respectively. The amount is due on demand and does not accrue interest. On January 1, 2016, the Company awarded stock options for 857,464 shares that were cashlessly exercised into 290,513 shares of Series A preferred stock or consulting efforts to an entity with common ownership. No stock options were awarded to related parties during 2017. During 2015, equipment purchasing was paid by an affiliate resulting in a note payable. The balance of the note was $74,000 as of December 31, 2017 and 2016, respectively. On April 30, 2017, the Company purchased $250,000 of secured debt that had been owed to that party, by an operating subsidiary of a related party. As a result of the transaction, the Company is now the creditor on the notes. The first note in the amount of $150,000 is dated March 13, 2013, carries an interest rate of 12% and was due on September 13, 2015. The second note in the amount of $100,000 is dated July 17, 2013, carries an interest rate of 12% and was due January 17, 2016. Both notes are in default and have been fully impaired due to collectability uncertainty. (see Note 9) During July 2017, an officer of the Company advanced $50,000 to Quest. The advance is unsecured, non interest bearing and due on demand. (see Note 3) On June 12, 2015, the Company executed a consulting agreement with an entity with common ownership. During 2017 and 2016, the Company incurred fees totaling $0 and $12,340,615, respectively, relating to services rendered under this agreement. The amount outstanding and payable as of December 31, 2017 and 2016, was $17,840,615 and $17,840,615, respectively. The amount is due on demand and does not accrue interest. |
VARIABLE INTEREST ENTITY
VARIABLE INTEREST ENTITY | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
VARIABLE INTEREST ENTITY | On October 24, 2016, the Company sold certain mineral and land interests to a subsidiary of an entity, LRR, owned by members of the Company’s management. LRR leases various parcels of land to QEI and engages in other activities creating miscellaneous income. The consideration for the transaction was a note in the amount of $178,683. The note bears no interest and is due in 2026. The balance as of December 31, 2016 was $130,145. As of January 28, 2017, the note was paid in full. This transaction was eliminated upon consolidation as a variable interest entity. The Company’s management also manages the operations of LRR. LRR has assets totaling $475,401 and liabilities totaling $77,443 as of December 31, 2017 for which there were no restrictions. The Company’s risk associated with LRR is greater than its ownership percentage and its involvement does not affect the Company’s business beyond the relationship described above. |
KENTUCKY NEW MARKETS DEVELOPMEN
KENTUCKY NEW MARKETS DEVELOPMENT PROGRAM | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
KENTUCKY NEW MARKETS DEVELOPMENT PROGRAM | On March 18, 2016, Quest Processing entered into two loans under the Kentucky New Markets Development Program for a total of $5,143,186. Quest Processing paid $460,795 of debt issuance costs resulting in net proceeds of $4,682,391. See note 3. The Company retains the right to call $5,143,186 of the loans in March 2023. State of Kentucky income tax credits were generated for the lender which the Company has guaranteed over their statutory life of seven years in the event the credits are recaptured or reduced. At the time of the transaction, the income tax credits were valued at $2,005,843. The Company has not established a liability in connection with the guarantee because it believes the likelihood of recapture or reduction is remote. On March 18, 2016, ERC Mining LLC, an entity consolidated as a VIE, lent $4,117,139 to an unaffiliated entity, as part of the Kentucky New Markets Development Program loans. The note bears interest at 4% and is due March 7, 2046. The balance as of December 31, 2017 and 2016 was $4,117,139 and $4,117,139, respectively. Payments of interest only are due quarterly until March 18, 2023 at which time quarterly principal and interest are due. The note is collateralized by the equity interests of the borrower. The Company’s management also manages the operations of ERC Mining LLC. ERC Mining LLC has assets totaling $4,415,860 and liabilities totaling $4,117,139 as of December 31, 2017 for which there are to be used in conjunction with the transaction described above. Assets totaling $3,818,418 and liabilities totaling $4,117,139, respectively, are eliminated upon consolidation. The Company’s risk associated with ERC Mining LLC is greater than its ownership percentage and its involvement does not affect the Company’s business beyond the relationship described above. |
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
MANAGEMENT AGREEMENT | On April 13, 2015, ERC entered into a mining and management agreement with an unrelated entity, to operate a coal mining and processing facility in Jasonville, Indiana. Under the management agreement, net funds advanced for the nine-month period ended September 30, 2018 and 2017 are $99,582 and $75,000, respectively and the amounts repaid totaled $127,957 and $394,645, respectively. During the nine-month period ended September 30, 2018 and 2017, fees paid under the agreement amounted $313,114 and $0, respectively which has been recorded in other income. | On April 13, 2015, ERC entered into a mining and management agreement with an unrelated entity, to operate a coal mining and processing facility in Jasonville, Indiana. The agreement called for a monthly base fee of $20,000 in addition to certain per ton fees based on performance to be paid to ERC. During 2017 and 2016 no fee had been paid and due to the uncertainty of collection, no fee has been recorded. Fees earned totaled $240,000 and $240,000 for 2017 and 2016, respectively, which have been fully reserved. The agreement called for equipment payments to be made by the entity. As of December 31, 2017, and 2016 amounts owed from the entity to ERC for equipment payments amounted to $192,432 and $258,096, respectively. During 2017, ERC had advances of $77,800 and repayments of $625,227 of amounts previously advanced. During 2016, ERC had advances of $1,975,000 which is unsecured, non-interest bearing and due upon demand and repayments of previously advanced amounts of $1,175,000. Of the amounts received in 2017, $387,427 was the collection of a previously impaired amount. As part of the agreement, ERC retained the administrative rights to the underlying mining permit and reclamation liability. The entity has the right within the agreement to take the mining permits and reclamation liability at any time. In addition, all operational activity that takes place on the facility is the responsibility of the entity. ERC acts as a fiduciary and as such has recorded cash held for the entity’s benefit as both an asset and an offsetting liability amounting to $82,828 and $24,987 respectively as of December 31, 2017 and 2016. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
INCOME TAXES | Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The primary temporary differences that give rise to the deferred tax assets and liabilities are as follows: accrued expenses. Deferred tax assets consisted of $4,152,800 at December 31, 2017, which was fully reserved. Deferred tax assets consist of net operating loss carryforwards in the amount of $4,152,800 at December 31, 2017, which was fully reserved. The net operating loss carryforwards for years 2015, 2016 and 2017 begin to expire in 2035. The application of net operating loss carryforwards are subject to certain limitations as provided for in the tax code. The Tax Cuts and Jobs Act was signed into law on December 22, 2017, and reduced the corporate income tax rate from 34% to 21%. The Company’s deferred tax assets, liabilities, and valuation allowance have been adjusted to reflect the impact of the new tax law. The Company’s effective income tax rate is lower than what would be expected if the U.S. federal statutory rate (34%) were applied to income before income taxes primarily due to certain expenses being deductible for tax purposes but not for financial reporting purposes. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. All years are open to examination as of December 31, 2017. |
EQUITY TRANSACTIONS
EQUITY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
EQUITY TRANSACTIONS | On July 18, 2018, we issued 150,000 common shares valued at $165,000 to Sylva International LLC for an agreement to provide digital marketing services to the Company. The agreement was subsequently terminated by the Company for breach of contract. The Company fully recognized $165,000 of stock based compensation for the nine months September 30, 2018. On September 12, 2018, pursuant to the Company’s Employee Incentive Stock Option Plan, we issued a total of 636,830 options to certain employees. The options have an expiration date of September 10, 2025 and have an exercise price of $1.00 per share. Of the total options issued, 25,000 vested immediately, with the balance of 611,830 options vesting equally over the course of three years, subject to restrictions regarding the employee’s continued employment by the Company. The fair value of the options is $482,751. The Company recognized $13,410 as option expense for the nine months September 30, 2018. The unamortized expense at September 30, 2018 is $469,342. On September 14, 2018, we issued 105,000 common shares valued at $152,250 and 175,000 warrants to Redstone Communications LLC and 45,000 common shares valued at $65,250 and 75,000 warrants to Mr. Marlin Molinaro as compensation for the first six months of an agreement to provide for public relations with existing shareholders, broker dealers, and other investment professionals for the Company. The warrants fair value was determined to be $234,067. The warrants granted are non-refundable and vest immediately and have an expiration date of September 14, 2023. Stock based compensation of $36,205 for the common shares issued and $234,067 for the warrant granted was expensed during the nine months September 30, 2018. As of September 30, 2018, the unamortized expense for the common shares issued is $181,250. The Company has Series A Preferred stock outstanding, which has the following key provisions: par value of $0.0001, voting rights of 33(1/3) votes of Class A Common stock for each Series A Preferred stock, conversion to Class A Common stock at a rate 3(1/3) Class A Common stock, liquidation rights at $1.65 per share, and anti-dilution protection through March 21, 2020 for conversion into Class A Common Stock at no less than 72.0% of the fully-diluted Class A Common stock outstanding. The Company evaluated the embedded conversion option under ASC 815. The conversion option was deemed clearly and closely related to its equity host instrument and as such was not bifurcated. Total preferred dividend requirement for the nine-month period ending September 30, 2018 and 2017 amounted to $104,157 and $0, respectively. Total stock, warrant and option compensation expense for the nine-month period ending September 30, 2018 and 2017 amounted to $448,727 and $0, respectively. The price of the above stock, warrants and options were determined using the closing stock price at the date of the grant and the Black-Sholes Option Pricing Model. 9/30/2018 Expected Dividend Yield 0% Expected volatility 120% Risk-free rate 1.4% Expected life of warrants 3-7 Years Weighted Weighted Average Average Aggregate Number of Exercise Contractual Intrinsic Warrants Price Life in Years Value Outstanding - December 31, 2017 5,364,230 $ 2.638 2.835 $ 138,069 Exercisable - December 31, 2017 5,364,230 $ 2.638 2.835 $ 138,069 Granted 886,830 $ 1.000 6.388 $ 5,386,975 Forfeited or Expired - - - - Exercised - $ - - - Outstanding - September 30, 2018 6,251,060 $ 2.432 2.474 $ 31,556,641 Exercisable - September 30, 2018 5,639,230 $ 2.590 1.982 $ 27,836,687 | A new 2016 Stock Incentive Plan (2016 Plan) was approved by the Board during January 2016. The Company may grant up to 6,363,225 shares of Series A Preferred stock under the 2016 Plan. The 2016 Plan is administered by the Board of Directors, which has substantial discretion to determine persons, amounts, time, price, exercise terms, and restrictions of the grants, if any. The options issued under the 2016 Plan vest upon issuance. During 2016, the Company issued options amounting to 6,363,225 shares (which includes shares disclosed above) under an adopted stock option plan that were cashlessly exercised into 2,267,362 shares of Series A preferred stock resulting in an expense of $88,675. On May 10, 2017, the Company issued warrants amounting to 8,334 common shares to a board member. The options expire May 9, 2020 and have an exercise price of $3.60. An expense in the amount of $40,000 was recognized for this issuance. The Company had a note payable in the amount of $50,000 which was assumed as part of the share exchange agreement and accounted for as an expense in the recapitalization transaction. On February 22, 2017, the Company modified the note to add a conversion option with a price of $1.50. The conversion option was beneficial, therefore, the Company recognized $50,000 as a discount to the assumed note payable. The note was immediately converted, resulting in the issuance of 33,334 shares and the full amortization of the discount. The Company has Series A Preferred stock outstanding, which has the following key provisions: par value of $0.0001, voting rights of 33(1/3) votes of Class A Common stock for each Series A Preferred stock, conversion to Class A Common stock at a rate 3(1/3) Class A Common stock, liquidation rights at $1.65 per share, and anti-dilution protection through March 21, 2020 for conversion into Class A Common Stock at no less than 72.0% of the fully-diluted Class A Common stock outstanding. The Company evaluated the embedded conversion option under ASC 815. The conversion option was deemed clearly and closely related to its equity host instrument and as such was not bifurcated. On March 7, 2017, ARC closed a private placement whereby it issued an aggregate of 500,000 shares of ARC’s Series B Preferred Stock at a purchase price of $1.00 per Series B Preferred share and warrants to purchase an aggregate of 208,334 shares of the ARC’s common stock (subject to certain adjustments), for proceeds to ARC of $500,000 (the “March 2017 Private Placement”). After deducting for fees and expenses, the aggregate net proceeds from the sale of the preferred series B shares and the warrants in the March 2017 Private Placement were approximately $500,000. The ‘A’ warrants totaling 138,889 shares expire March 6, 2020 and hold an exercise price of $7.60 per share. The ‘A-1’ warrants totaling 69,445 shares expire March 6, 2020 and hold an exercise price of $.003 per share. On April 2, 2017, American Resources Corporation closed a private placement whereby it issued an aggregate of 100,000 shares of the ARC’s Series B Preferred Stock at a purchase price of $1.00 per Series B Preferred share, and warrants to purchase an aggregate of 27,778 shares of the ARC’s common stock (subject to certain adjustments), for proceeds to ARC of $100,000 (the “April 2017 Private Placement”). After deducting for fees and expenses, the aggregate net proceeds from the sale of the Series B Preferred Stock and the warrants in the April 2017 Private Placement were approximately $100,000. The ‘A’ warrants totaling 27,778 shares expire April 2, 2019 and hold an exercise price of $7.20 per share. On April 30, 2017, American Resources Corporation closed on a private placement agreement whereby it issued an aggregate of 250,000 shares of the ARC’s Series B Preferred Stock and A warrants amounting to 69,445 to an unrelated party for the purchase of $250,000 of secured debt that had been owed to that party, by an operating subsidiary of a related party. As a result of the transaction, the Company is now the creditor on the notes. The first note in the amount of $150,000 is dated March 13, 2013, carries an interest rate of 12% and was due on September 13, 2015. The second note in the amount of $100,000 is dated July 17, 2013, carries an interest rate of 12% and was due January 17, 2016. Both notes are in default and were impaired. The A warrants totaling 69,445 shares expire April 29, 2019 and hold an exercise price of $7.20 per share. The Series B Preferred Stock converts into common stock of the Company at the holder’s discretion at a conversion price of $3.60 per common share (one share of Series B Preferred converts to common at a ratio of 0.27778). Furthermore, the Series B Preferred share purchase agreement provides for certain adjustments to the conversion value of the Series B Preferred to common shares of the Company that are based on the EBITDA (earnings before interest, taxes, depreciation, and amortization) for the Company for the 12 months ended March 31, 2018 of $6,000,000. Those adjustments provide for a decrease in the conversion value based on the proportional miss of the Company’s EBITDA, up to a maximum of 30.0% decrease in the conversion value of the Series B Preferred to common shares. The Series B Preferred share purchase agreement provides, for a period of nine months post execution of the purchase agreement, an option for the investor to put the Series B Preferred investment to the Company at a 12% premium to the Series B Preferred purchase price should the Company achieve certain hurdles, such as a secondary offering and an up-listing to a national stock exchange. Such put option expires after 20 days from notification of the Company to the Series B Preferred investor of the fulfillment of such qualifications. Total preferred dividend requirement for 2017 and 2016 amounted to $53,157 and $0, respectively. Total stock-based compensation expense incurred for awards to employees during 2017 and 2016 was $0 and $88,675, respectively. Fair value was determined using the total enterprise value approach. On July 5, 2017, the Company issued 13,333 common shares and warrants to purchase 33,333 shares to an unrelated consulting company. The warrants had an exercise price of $3.60 with a three-year term. The total compensation expense related to this warrant was $10,000 which was determined using the closing stock price at the date of the grant and the Black-Sholes Option Pricing Model. In conjunction with the ARC business loan, warrants of 5,996,609 common shares were issued and 979,603 were subsequently canceled at an exercise price ranging from $.01 to $11.44 per share and with an expiration date of October 2, 2020. 2017 Expected Dividend Yield 0 % Expected volatility 13.73 % Risk-free rate 1.62 % Expected life of warrants 2-3 years Weighted Weighted Average Average Aggregate Number of Exercise Contractual Intrinsic Warrants Price Life in Years Value Outstanding – December 31, 2015 - - - - Exercisable - December 31, 2015 - - - - Granted - - - - Forfeited or Expired - - - - Outstanding - December 31, 2016 - - - - Exercisable - December 31, 2016 - - - - Granted 6,343,833 $ 2.317 2.706 $ 174,253 Forfeited or Expired 979,603 $ 0.560 1.997 $ 36,184 Exercised - - - - Outstanding - December 31, 2017 5,364,230 $ 2.638 2.835 $ 138,069 Exercisable - December 31, 2017 5,364,230 $ 2.638 2.835 $ 138,069 |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
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. Should the Company decide to renew the consulting agreement with Redstone Communication, LLC, as compensation for the following six months of engagement, we will issue to Redstone Communications another five-year option to purchase up to 175,000 common shares of our Company at an exercise price of $1.50 per share, another 105,000 common shares, and a cash payment of $10,000 per month for the second six-month term (with the first two months payable in advance upon renewal of the second term). Furthermore, we will issue to Mr. Marlin Molinaro another five-year option to purchase up to 75,000 common shares of our Company at an exercise price of $1.50 per share and another 45,000 common shares. Should Redstone Communications, LLC and Mr. Molinaro receive and exercise the options received under the second six months of engagement, the Company will receive up to $262,500 and $112,500, respectively. | 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. The company leases various office space some from an entity which we consolidate as a variable interest entity. (see note 5). The future annual rent is $6,000 through 2021. Rent expense for 2017 and 2016 amounted to $26,000 each year, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes to Financial Statements | ||
SUBSEQUENT EVENTS | During October 2018, an officer of the company advanced an additional $13,500. The advance is non-interest bearing, non-secured and due on demand. On October 25, 2018, Wyoming County Coal LLC was formed as a wholly owned subsidiary of Quest Energy Inc. 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 priced at $12.79 per share of common stock, a seller note of $350,000 and a seller note of $250,000. Management is still gathering the information needed to complete the allocation of the purchase price to the assets acquired and liabilities assumed. On October 24, 2018, options totaling 69,420 common shares of the company were exercised by a non-affiliated shareholder. The exercise was a cashless exercise. On November 5, 2018, 4,336,012 Series A preferred shares were converted into 14,453,373 common shares of the company in a cashless conversion under the terms of the agreement. On November 7, 2018, 964,290 Series B preferred shares were converted into 267,859 common shares of the company in a cashless conversion. On November 7, 2018, $36,000 worth of trade payables were settled with 6,000 common shares of the company. On November 8, 2018, the Company's Board of Directors elected to amend its Articles of Incorporation, canceled its Series B Preferred Stock, designated 20,000,000 shares of a newly created Series C Preferred Stock, and amended its Series A Preferred stock for the following key provisions: voting rights of 333(1/3) votes of Class A Common stock for each Series A Preferred stock, and anti-dilution protection through March 1, 2020 at no less than 72.0% of the fully-diluted Class A Common stock. The newly created Series C Preferred Stock carries the following key provisions: automated conversion to Class A Common Stock upon the completion of a underwritten equity offering totaling $5,000,000 or more and a paid in kind annual dividend with a 10% annual percentage rate. On November 13, 2018, $300,000 was advanced under the ARC business loan which carries annual interest at 7%, is due within two months of advancement and is secure by all company assets. On November 14, $225,000 of debt to an unrelated entity, was converted into 37,500 shares of Class A Common stock. On November 15, three independent directors were appointed. As compensation for their services, each of the directors were issued a three-year warrant to purchase up to 15,000 common shares of our company at an exercise price of $6.00 per share, subject to certain price adjustments and other provisions found within the respective warrants. Should each of the three directors exercise the option through a cash payment to the Company, the Company will receive up to $90,000 from each director, and each director will receive up to 15,000 restricted common shares of the Company. There are no registration rights associated with this warrant that require the Company to register the shares. On November 27, 2018, 50,000 shares of Series C preferred shares were sold at $1.00 per share resulting in proceeds of $50,000 for the Company. On December 3, 2018, 10,000 shares of Class A Common stock and an option to purchase 417 shares of the company were issued to an unrelated firm for consulting services. The option has a strike price of $6.00 per share, has a two-year term, and can be exercised via a cashless exercise by the holder at any time during its term. The agreement also carries the commitment that a cash fee of $10,000 will be payable under the agreement at the time the company closes a financing of greater than $1.0 million. An additional 15,000 shares will be issued on June 1, 2019 if the agreement is still in effect. On December 24, 2018, the ARC business loan was amended to reflect the proper state of incorporation for the Company. On December 31, 2018, the Company entered into a loan agreement with an unrelated party. The loan is for an amount up to $6,500,000 of which $3,000,000 was advanced on December 31, 2018 and $2,000,000 was advanced on February 1, 2019. The promissory agreement carries interest at 5% annual interest rate and payments of principal and interest shall be repaid at a per-ton rate of coal sold to the lender. The outstanding amount of the note has a maturity of April 1, 2020. The note is secured by the assets of the Company. On January 16, 2019, an affiliate of the Company converted its remaining 29,051 shares of Series A Preferred into 96,837 Class A Common shares On January 17, 2019, a non-affiliated shareholder partially exercised 300,000 shares of a warrant they held in the Company. The exercise was cashless, and the shareholder received 299,697 shares of common stock as a result of the conversion. On January 25, 2019, the Company extended its consulting agreement with Redstone Communications, LLC for an additional six-month term, and as a result, we issued 105,000 restricted common shares to Redstone Communications LLC and 45,000 restricted common shares to Mr. Marlin Molinaro, another five-year option to purchase up to 175,000 common shares of our Company at an exercise price of $1.50 per share and issued to Mr. Marlin Molinaro another five-year option to purchase up to 75,000 common shares of our Company at an exercise price of $1.50 per share as compensation for the second six months of an agreement. Should Redstone Communications, LLC and Mr. Molinaro receive and exercise the options received under the second six months of engagement, the Company will receive up to $262,500 and $112,500, respectively. These common shares have not been physically issued. On January 27, 2019, the Company issued 1,000 shares of Class A Common Stock to an unrelated party for the consideration of $5,000 cash to the Company. On January 28, 2019, the Company issued a total of 400 shares of Class A Common Stock to two unrelated parties for the total consideration of $2,000 cash to the Company. On January 30, 2019, the Company entered into an Investor Relations Agreement with American Capital Ventures, Inc. (“American Capital”) whereby American Capital will provide, among other services, assistance to the Company in planning, reviewing and creating corporate communications, press releases, and presentations and consulting and liaison services to the Company relating to the conception and implementation of its corporate and business development plan. The term of the agreement is six months and American Capital was immediately issued 9,000 shares of Class A Common stock as compensation under the agreement. On February 1, 2019, the Company issued a total of 1,000 shares of Class A Common Stock to two unrelated parties for the total consideration of $5,000 cash to the Company. On February 4, 2019, the ARC business loan was amended to allow conversion of outstanding amounts to Class A Common shares at a price per share of $5,25. On February 12, 2019, McCoy signed a contract with an unrelated party for the acquisition of stock and membership interests of entities with non-operating assets consisting of surface and mineral ownership and other related agreements. The transaction is expected to close simultaneous with this offering. Consideration is expected to be in the form of 2,000,000 Class A common shares, priced at $12.79 per share of common stock, as well as $500,000 cash and a promissory note totaling $2,000,000 with a maturity of less than 1 year. The note is secured by a land contract on the acquired property. On February 6, 2019, a non-affiliated shareholder partially exercised 300,000 shares of a warrant they held in the Company. The exercise was cashless, and the shareholder received 299,730 shares of common stock as a result of the conversion. On February 4 through February 8, 2019, the Company issued a total of 17,800 shares of Class A Common Stock to sixteen unrelated parties for the total consideration of $89,000 cash to the Company. On February 10, 2019, $3,000 worth of trade payables were settled with 500 common shares of the company. | On January 25, 2018, Quest entered into an equipment financing agreement with an unaffiliated entity, to purchase certain surface equipment for $346,660. The agreement calls for monthly payments until maturity of December 25, 2020. During 2018, the company drew an additional $1,300,000 on the ARC business loan. (see note 3) On March 29, 2018, Quest entered into an equipment financing agreement with an affiliated entity, to purchase certain surface mining equipment for $135,000. Payments of $75,000 and $60,000 are due on April 6, 2018 and April 13, 2018, respectively. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Summary Of Significant Accounting Policies | ||
Basis of Presentation and Consolidation | The consolidated financial statements include the accounts for the nine months ended September 30, 2018 and 2017 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) and Knott County Coal LLC (KCC). All significant intercompany accounts and transactions have been eliminated. As of July 1, 2018, the accounts of Land Resources & Royalties, LLC have been deconsolidated from the financial statements based upon the ongoing review of its status as a variable interest entity. On August 23, 2018, KCC disposed of certain non-operating assets totaling $111,567 and the corresponding asset retirement obligation totaling $919,158 which resulted in a gain of $807,591. 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”) | 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) and Knott County Coal LLC (KCC). All significant intercompany accounts and transactions have been eliminated. On January 5, 2017, QEI entered into a share exchange agreement with NGFC Equities, Inc (NGFC). Under the agreement, the shareholders of QEI exchanged 100% of its common stock to NGFC for 4,817,792 newly created Series A Preferred shares that is convertible into approximately 95% of outstanding common stock of NGFC. The previous NGFC shareholders retained 845,377 common shares as part of the agreement. The conditions to the agreement were fully satisfied on February 7, 2017, at which time the Company took full control of NGFC. NGFC has been renamed to American Resources Corporation (ARC). The transaction was accounted for as a recapitalization. QEI was the accounting acquirer and ARC will continue the business operations of QEI, therefore, the historical financial statements presented are those of QEI and its subsidiaries. The equity and share information reflect the results of the recapitalization. On May 15, 2017 ARC initiated a one-for-thirty reverse stock split. The financial statements have been retrospectively restated to give effect to this split. 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 Company is the primary beneficiary of ERC Mining, LLC, which qualifies as a variable interest entity. Accordingly, the assets, liabilities, revenue and expenses of ERC Mining, LLC have been included in the accompanying consolidated financial statements. The Company has no ownership in ERC Mining, LLC. Determination of the Company as the primary beneficiary is based on the power through its management functions to direct the activities that most significantly impact the economic performance of ERC Mining, LLC. On March 18, 2016, the company lent ERC Mining, LLC $4,117,139 to facilitate the transaction described in Note 6, which represent amounts that could be significant to ERC. No further support has been provided. The Company has ongoing involvement in the management of ERC Mining, LLC to ensure their fulfillment of the transaction described in Note 6. The Company is the primary beneficiary of Land Resources & Royalties LLC (LRR) which qualifies as a variable interest entity. Accordingly, the assets, liabilities, revenue and expenses of Land Resources & Royalties have been included in the accompanying consolidated financial statements. The Company has no ownership in LRR. Determination of the Company as the primary beneficiary is based on the power through its management functions to direct the activities that most significantly impact the economic performance of LRR. On October 24, 2016, the company issued LRR a note in the amount of $178,683 to facilitate the transaction described in Note 5, which represent amounts that could be significant to LRR. No further support has been provided. The Company has ongoing involvement in the management of LRR to ensure their fulfillment of the transaction described in Note 5. Deane was formed in November 2007 for the purpose of operating underground coal mines and coal processing facilities. Deane was acquired on December 31, 2015 and as such no operations are presented prior to the acquisition date. Quest P ERC was formed in April 2015 for the purpose managing an underground coal mine and coal processing facility. Operations commenced in June 2015. McCoy was formed in February 2016 for the purpose of operating underground coal mines and coal processing facilities. The assets of McCoy were acquired on February 17, 2016 and as such no operations are presented prior to the acquisition date. KCC was formed in September 2004 for the purpose of operating underground coal mines and coal processing facilities. KCC was acquired on April 14, 2016 and as such no operations are presented prior to the acquisition date. On February 17, 2016, McCoy Elkhorn Coal LLC (McCoy) acquired certain assets in exchange for $100 and for assuming certain liabilities of Fortress Resources, LLC. The fair values of the asset retirement obligation liabilities assumed were determined to be $3,561,848 respectively. The liabilities assumed do not require fair value readjustments. The assets acquired of McCoy do not represent a business as defined in FASB AS 805-10-20. McCoy does not have an integrated set of activities and assets that that is capable of being conducted and managed for the purpose of providing a return or other economic benefit to their investors, members or participants. Accordingly, the assets acquired are initially recognized at the consideration paid, which was the liabilities assumed, 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. The assets acquired and liabilities assumed of McCoy were as follows at the purchase date: Assets Cash $ 2,935,800 Underground Mining Equipment 531,249 Surface Mining Equipment 36,218 Coal Preparation and Loading Facilities 58,681 Liabilities Asset Retirement Obligation $ 3,561,848 On April 14, 2016, the Company acquired 100% of the membership interests of ICG Knott County, LLC, subsequently renamed Knott County Coal LLC. The fair values of the asset retirement obligation liabilities assumed were determined to be $4,499,434 respectively. The liabilities assumed do not require fair value readjustments. The assets acquired of ICG Knott County do not represent a business as defined in FASB AS 805-10-20. IGC Knott County does not have an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return or other economic benefit to their investors, members or participants. Accordingly, the assets acquired and liabilities assumed are initially recognized at the consideration paid, including direct acquisition costs. The cost is allocated to the group of assets acquired and liabilities assumed based on their relative fair value. The assets and liabilities assumed of ICG Knott County were as follows on the purchase date: Assets Cash $ 2,380,000 Underground Mining Equipment 1,533,937 Surface Mining Equipment 206,578 Land 178,683 Coal Preparation and Loading Facilities 200,236 Liabilities Asset Retirement Obligation $ 4,499,434 As a result of the KCC and McCoy acquisitions during 2016, $8,061,282 of ARO was assumed for net cash of $5,315,700 and property, equipment and land of $2,745,582. |
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 nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or any other period. These financial statements should be read in conjunction with the Company’s 2017 audited financial statements and notes thereto which were filed on Form 10K on April 23, 2018. | |
Going Concern | The Company has suffered recurring losses from operations and currently has 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. | 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. |
Estimates | Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Actual results could vary from those estimates. | |
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 | 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 |
Related Party Policies | In accordance with FASB ASC 850 related parties are defined as either an executive, director or nominee, greater than 10% beneficial owner, or an immediate family member of any of the proceeding. Transactions with related parties are reviewed and approved by the directors of the Company, as per internal policies. | |
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. | |
Cash | Cash | Cash As of December 31, 2017 and 2016 total cash, including restricted cash, amounted to $385,665 and $925,627, respectively. Restricted cash as of December 31, 2017 and 2016 amounted to $198,943 and $141,102, respectively. Restrictions to cash include funds held for the benefit other parties in the amount of $82,828 and $24,987 as of December 31, 2017 and 2016, respectively. The use of these funds are in conjunction with the management of the property owned by this party and the duration of the restrictions matches the duration of the management agreement. (See Note 7) 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. (See Note 6) |
Restricted cash | As part of the Kentucky New Markets Development Program an asset management fee reserve was set up in the amount of $116,115. The funds are held to pay annual asset management fees to an unrelated party through 2021. The balance as of September 30, 2018 and December 31, 2017 was $73,730 and $116,115, respectively. A lender of the Company also required a reserve account to be established. The balance as of September 30, 2018 and December 31, 2017 was $148,546 and $0, respectively. The total balance of restricted cash also includes amounts held under the management agreement in the amount of $63,767 and $82,828, respectively. See note 5 for terms of the management agreement. The balance as of September 30, 2018 and December 31, 2017 was $286,043 and $198,943, respectively. 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 nine months ended September 30, 2018 and September 30, 2017. September 30, 2018 September 30, 2017 Cash $ 57,739 $ 342,041 Restricted Cash 286,043 189,012 Total cash and restricted cash presented in the consolidated statement of cash flows $ 343,782 $ 531,053 | |
Asset Acquisitions | On April 21, 2018, McCoy acquired certain assets known as the Point Rock Mine (Point Rock) in exchange for assuming certain liabilities of the seller. The fair values of the liabilities assumed were $53,771 for prior vendors and $2,098,052 for asset retirement obligation totaling $2,151,823. The liabilities assumed do not require fair value readjustments. In addition, McCoy entered into a surface and mineral sub-lease in the amount of up to $4,000,000 to be paid only upon coal extraction at $2 per extracted ton of coal. McCoy will also pay a portion of the sales price as a royalty with an annual minimum payment of $60,000 starting in January 2019. The acquired assets have an anticipated life of 5 years. Capitalized mining rights will be amortized based on productive activities over the anticipated life of 5 years. Amortization expense for the 3 months ended September 30, 2018 and 2017 amounted to $179,318 and $0, respectively. The assets will be measured for impairment when an event occurs that questions the realization of the recorded value. The assets acquired of Point Rock 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, 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. The assets acquired and liabilities assumed of Point Rock were as follows at the purchase date: Assets Mining Rights $ 2,151,823 Liabilities Vendor Payables $ 53,771 Asset Retirement Obligation $ 2,098,052 On May 10, 2018, KCC acquired certain assets known as the Wayland Surface Mine (Wayland) in exchange for assuming certain liabilities of the seller. The fair values of the liabilities assumed were $66,129 for asset retirement obligation. The liabilities assumed do not require fair value readjustments. In addition, KCC entered into a royalty agreement with the seller to be paid only upon coal extraction in the amount of $1.50 per extracted ton of coal. The acquired assets have an anticipated life of 7 years. Capitalized mining rights will be amortized based on productive activities over the anticipated life of 7 years. Amortization expense for the 3 months ended September 30, 2018 and 2017 amounted to $2,067 and $0, respectively. The assets will be measured for impairment when an event occurs that questions the realization of the recorded value. The assets acquired of Wayland 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, 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. The assets acquired and liabilities assumed of Wayland were as follows at the purchase date: Assets Mining Rights $ 66,129 Liabilities Asset Retirement Obligation $ 66,129 | |
Concentration | As of December 31, 2017 and 2016 63% and 78% of revenue and 99% and 97% of outstanding accounts receivable came from three and two customers, respectively. | |
Coal Property and Equipment | Coal Property and Equipment Property and equipment and amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future net undiscounted cash flows expected to be generated by the related assets. If these assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. Costs related to maintenance and repairs which do not prolong the asset’s useful life are expensed as incurred. | |
Mine Development | Costs of developing new coal mines, including asset retirement obligation assets, are capitalized and amortized using the units-of-production method over estimated recoverable coal deposits or proven reserves. Costs incurred for development and expansion of existing coal deposits or proven reserves are expensed as incurred. | |
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. During the periods ending September 30, 2018 and 2017, $0 and $281,907 were incurred for loss on settlement on ARO, respectively. The table below reflects the changes to our ARO: Balance at December 31, 2017 $ 19,885,057 Accretion – nine months September 30, 2018 1,435,295 Reclamation work – nine months September 30, 2018 (0 ) Asset disposition (919,158 ) Point Rock Acquisition 2,098,052 Wayland Acquisition 66,129 Balance at September 30, 2018 $ 22,565,375 | 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 coal deposits. We are using a discount rate of 10%, risk free rate of .23% and inflation rate of 1.5%. 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 2017 and 2016, $0 and $71,245 were incurred for loss on settlement on ARO. The table below reflects the changes to our ARO: 2017 2016 Beginning Balance $ 18,126,873 $ 8,586,464 Accretion 1,791,051 1,664,774 Reclamation work (32,867 ) (185,647 ) McCoy Acquisition - 3,561,848 KCC Acquisition - 4,499,434 Ending balance $ 19,885,057 $ 18,126,873 Current portion of reclamation liability $ 2,033,862 $ 519,489 Long-term portion of reclamation liability $ 17,851,195 $ 17,607,384 |
Income Taxes | Income Taxes The Company filed an initial tax return in 2015. Management believes that the Company’s income tax filing positions will be sustained on audit and does not anticipate any adjustments that will result in a material change. Therefore, no reserve for uncertain income tax positions has been recorded. The Company’s policy for recording interest and penalties, if any, associated with income tax examinations will be to record such items as a component of income taxes. | |
Revenue Recognition | The Company recognizes revenue in accordance with ASC 605 when the terms of the contract have been satisfied; generally, this occurs when delivery has been rendered, the fee is fixed or determinable, and collectability is reasonably assured. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Our revenue is comprised of sales of mined coal and services for processing coal. All of the activity is undertaken in eastern Kentucky. We recognize revenue from coal sales at the time risk of loss passes to the customer at contracted amounts and amounts are deemed collectible. Revenue from coal processing and loading are recognized when services have been performed according to the contract in place. | |
Leases | Leases are reviewed by management based on the provisions of ASC 840 and examined to see if they are required to be categorized as an operating lease, a capital lease or a financing transaction. The Company leases certain equipment and other assets under noncancelable operating leases, typically with initial terms of 3 to 7 years. Minimum rent on operating leases is expensed on a straight-line basis over the term of the lease. In addition to minimum rental payments, certain leases require additional payments based on sales volume, as well as reimbursement of real estate taxes, which are expensed when incurred. Capital leases are recorded at the present value of the future minimum lease payments at the inception of the lease. The gross amount of assets recorded under capital lease amounted to $333,875, all of which is classified as surface equipment. | |
Loan Issuance Costs and Discounts | Loan Issuance Costs and Discounts | |
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 September 30, 2018 and December 31, 2017 amounted to $0, for both periods. Allowance for other accounts receivables as of September 30, 2018 and December 31, 2017 amounted to $0 and $92,573, respectively. Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of September 30, 2018 and December 31, 2017. | 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 December 31, 2017 and 2016 amounted to $0 and $0, respectively. Allowance for other accounts receivables as of December 31, 2017 and 2016 amounted to $92,573 and $640,000, respectively. Trade and loan receivables are carried at amortized cost, net of allowance for losses. Amortized cost approximated book value as of December 31, 2017 and 2016. |
Inventory | Inventory consisting of mined coal is stated at the lower of cost (first in, first out method) or net realizable value. | |
Stock-based Compensation | Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the applicable vesting period of the stock award (generally 0 to 5 years) using the straight-line method. Stock compensation to employees is accounted for under ASC 718 and stock compensation to non-employees is accounted for under ASC 505. | |
Earnings Per Share | The Company’s basic earnings per share (EPS) amounts have been computed based on the average number of shares of common stock outstanding for the period and include the effect of any participating securities as appropriate. Diluted EPS includes the effect of the Company’s outstanding stock options, restricted stock awards, restricted stock units and performance-based stock awards if the inclusion of these items is dilutive. For the years ended December 31, 2017 and 2016, the Company had 5,364,230 and 0 outstanding stock warrants, respectively. For the years ended December 31, 2017 and 2016, the Company did not have any restrictive stock awards, restricted stock units, or performance-based awards. | |
Reclassifications | Reclassifications of prior periods have been made to conform with current year presentation. | Reclassifications have been made to conform with current year presentation. |
New Accounting Pronouncements | - ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities - ASU 2016-02, Leases - ASU 2017-09, Compensation – Stock Compensation, - ASU 2017-11, Earnings Per Share, - ASU 2018-05, Income Taxes, - ASU 2018-07, Compensation-Stock Compensation (Topic 718), Management has elected to early adopt ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ASU 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230). ASU 2014-09, Revenue from Contracts with Customers (Topic 606). | Management has determined that the impact of the following recent FASB pronouncements will not have a material impact on the financial statements. ● Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers ● ASU 2015-11, Simplifying the Measurement of Inventory ● ASU 2015-17, Balance Sheet Classification of Deferred Taxes ● ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities ● ASU 2016-02, Leases ● ASU 2016-18, Statement of Cash Flows: Restricted Cash, ● ASU 2017-01, Business Combinations, ● AUS 2017-09, Compensation – Stock Compensation, ● ASU 2017-11, Earnings Per Share, ● ASU 2018-05, Income Taxes, Management has elected to early adopt ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ASU 2014-09, Revenue from Contracts with Customers (Topic 606). |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Schedule of restricted cash and cash equivalents | September 30, 2018 September 30, 2017 Cash $ 57,739 $ 342,041 Restricted Cash 286,043 189,012 Total cash and restricted cash presented in the consolidated statement of cash flows $ 343,782 $ 531,053 | |
Schedule of assets acquired and liabilities assumed | 2017 2016 Beginning Balance $ 18,126,873 $ 8,586,464 Accretion 1,791,051 1,664,774 Reclamation work (32,867 ) (185,647 ) McCoy Acquisition - 3,561,848 KCC Acquisition - 4,499,434 Ending balance $ 19,885,057 $ 18,126,873 Current portion of reclamation liability $ 2,033,862 $ 519,489 Long-term portion of reclamation liability $ 17,851,195 $ 17,607,384 | |
Schedule of Asset Retirement Obligations | Balance at December 31, 2017 $ 19,885,057 Accretion – nine months September 30, 2018 1,435,295 Reclamation work – nine months September 30, 2018 (0 ) Asset disposition (919,158 ) Point Rock Acquisition 2,098,052 Wayland Acquisition 66,129 Balance at September 30, 2018 $ 22,565,375 | |
Point Rock [Member] | ||
Schedule of assets acquired and liabilities assumed | Assets Mining Rights $ 2,151,823 Liabilities Vendor Payables $ 53,771 Asset Retirement Obligation $ 2,098,052 | |
Wayland [Member] | ||
Schedule of assets acquired and liabilities assumed | Assets Mining Rights $ 66,129 Liabilities Asset Retirement Obligation $ 66,129 | |
ICG Knott County [Member] | ||
Schedule of Asset Retirement Obligations | Assets Cash $ 2,380,000 Underground Mining Equipment 1,533,937 Surface Mining Equipment 206,578 Land 178,683 Coal Preparation and Loading Facilities 200,236 Liabilities Asset Retirement Obligation $ 4,499,434 | |
McCoy [Member] | ||
Schedule of Asset Retirement Obligations | Assets Cash $ 2,935,800 Underground Mining Equipment 531,249 Surface Mining Equipment 36,218 Coal Preparation and Loading Facilities 58,681 Liabilities Asset Retirement Obligation $ 3,561,848 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Property And Equipment | ||
Property, Plant and Equipment | September 30, 2018 December 31, 2017 Processing and rail facility $ 2,802,855 $ 2,914,422 Underground equipment 9,346,692 8,887,045 Surface equipment 4,532,724 3,957,603 Mining rights (Less: accumulated amortization of $181,385) 2,036,567 - Land - 178,683 Less: Accumulated depreciation (6,600,108 ) (4,820,569 ) Total Property and Equipment, Net $ 12,118,730 $ 11,117,184 | 2017 2016 Processing and rail facility $ 2,914,422 $ 2,914,422 Underground equipment 8,887,045 7,500,512 Surface equipment 3,957,603 3,751,054 Land 178,683 178,683 Less: Accumulated depreciation (4,820,569 ) (2,262,855 ) Total Property and Equipment, Net $ 11,117,184 $ 12,081,816 |
Property, Plant and Equipment, Estimated Useful Lives | Processing and Rail Facilities 20 years Surface Equipment 7 years Underground Equipment 5 years Mining Rights 5 years | Processing and Rail Facilities 20 years Surface Equipment 7 years Underground Equipment 5 years |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Notes Payable | ||
Schedule of note payable | Total debt balance as of December 31, 2017 $ 14,726,842 During the nine-month period ended September 30, 2018, $2,450 ,000 was drawn from the ARC business loan which carries annual interest at 7%, is due within two months of advancement and is secure by all company assets. On June 4, 2018, $30,000 and September 28, 2018, $75,000 of this note was repaid. 2,450,000 On January 25, 2018, QEI entered into an equipment loan agreement with an unrelated party in the amount of $346,660. The agreement calls for monthly payments of $11,360 until maturity date of December 24, 2020 and carries an interest rate of 9%. The loan is secured by the underlying surface equipment purchased by the loan. Loan proceeds were used directly to purchase equipment. 346,660 On March 28, 2018, QEI entered into an equipment loan agreement with an unrelated party in the amount of $135,000. The agreement called for payments of $75,000 and $60,000 are due on April 6, 2018 and April 13, 2018, respectively, at which date the note was repaid in full. Loan proceeds were used directly to purchase equipment. 135,000 On May 9, 2018, QEI entered into a loan agreement with an unrelated party in the amount of $1,000,000 with a maturity date of September 24, 2018 with monthly payments of $250,000 due beginning June 15, 2018. The note is secured by the assets and equity of the company and carries an interest rate of 0%. Proceeds of the note were split between receipt of $575,000 cash and $425,000 payment for new equipment. No payments have been made on the note which is in default. 1,000,000 During May 2018, the company entered into a financing arrangement with two unrelated parties. The notes totaled $2,859,500, carried an original issue discount of $752,535, interest rate of 33% and have a maturity date of January 2019 and are secured by future receivables as well as personal guarantees of two officers of the company. 2,963,958 During the nine-month period ended September 30, 2018 net additions to the factoring agreement totaled $787,435. 787,435 Total increases to debt 7,683,053 Less cash payments (2,064,902 ) In May 2018, an unrelated party forgave $315,000 of the $540,000 equipment loan agreement dated September 30, 2016. (315,000 ) Issuance discount (752,535 ) Amortization of issuance cost and loan discounts 420,134 Ending debt balance at September 30, 2018 $ 19,697,592 Less current portion: $ 14,625,099 Total long term debt at September 30, 2018 $ 5,072,493 | 2017 2016 Equipment Loans - QEI Note payable to an unrelated company in monthly installments of $2,064, with interest at 8.75%, through maturity in March 2019, when the note is due in full. The note is secured by equipment and a personal guarantee by an officer of the Company. $ 30,962 $ 50,235 Note payable to an unrelated company in monthly installments of $1,468, With interest at 6.95%, through maturity in March 2021, when the note is due in full. The note is secured by equipment and a personal guarantee by an officer of the Company 57,290 64,175 On September 8, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, to purchase certain underground mining equipment for $600,000. The agreement provided for $80,000 paid upon execution, $30,000 monthly payments until the balance is paid in full. 460,000 0 On October 19, 2017, Quest entered into an equipment financing agreement with an unaffiliated entity, to purchase certain surface equipment for $90,400. The agreement calls for monthly payments until maturity of October 19, 2019 and interest of 9.95%. 88,297 0 On October 20, 2017, Quest entered into an equipment financing agreement with an unaffiliated entity, to purchase certain surface equipment for $50,250. The agreement calls for monthly payments until maturity of October 20, 2019 and interest of 10.60%. 51,320 0 On December 4, 2017, Quest entered into an equipment financing agreement with an unaffiliated entity, to purchase certain surface equipment for $56,900. The agreement calls for monthly payments until maturity of January 7, 2021. 56,900 0 Business Loan - ARC On October 4, 2017, ARC entered into a consolidated loan agreement with an unaffiliated entity. $5,444,632 has been advanced under the note. $1,300,000 of the note was advanced after December 31, 2017. The agreement calls for interest of 7% and with all outstanding amounts due on demand. The note is secured by all assets of Quest and subsidiaries. In conjunction with the loan, a warrants for up to 5,017,006 common shares were issued at an exercise price ranging from $.01 to $11.44 per share and with an expiration date of October 2, 2020. The loan consolidation was treated as a loan modification for accounting purposes giving rise to a discount of $140,000. The discount was amortized over the life of the loan with $105,000 included as interest expense and $35,000 included as a note discount as of December 31, 2017. 4,444,632 175,000 Equipment Loans – ERC Equipment lease payable to an unrelated company in 48 equal payments of $771 with an interest rate of 5.25% with a balloon payment at maturity of June 30, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 7. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. 27,288 35,644 Equipment lease payable to an unrelated company in 48 equal payments of $3,304 with an interest rate of 5.25% with a balloon payment at maturity of June 30, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 7. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. 128,254 161,738 Equipment lease payable to an unrelated company in 48 equal payments of $2,031 with an interest rate of 5.25% with a balloon payment at maturity of August 13, 2019. The note is secured by equipment and a corporate guarantee from Quest Energy Inc. The equipment is being utilized as part of the management agreement referred to in Note 7. Therefore, the title of the assets are not held with ERC and there is a corresponding receivable due for the payment of this note. 36,890 60,541 Equipment Loans - McCoy Equipment note payable to an unrelated company, with monthly payments of $150,000 in September 2016, October 2016, November 2016 and a final payment of $315,000 due in December 2016. No extensions have been entered into subsequent to December 31, 2017 resulting in the note being in default. 540,000 540,000 On May 2, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $250,000. Full payment was due September 12, 2017. 135,000 0 On June 12, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $22,500. Full payment was due September 12, 2017. 22,500 0 On September 25, 2017, Quest entered into an equipment purchase agreement with an unaffiliated entity, Inc. to purchase certain underground mining equipment for $350,000. The agreement provided for $20,000 monthly payments until the balance is paid in full. 330,000 0 Business Loans - McCoy Business loan agreement with Crestmark Bank in the amount of $200,000, with monthly payments of 23,000, with an interest rate of 12%, through maturity in January 1, 2018. The note is secured by a corporate guaranty by the Company and a personal guaranty. 66,667 0 Seller Note - Deane Deane Mining - promissory note payable to an unrelated company, with monthly interest payments of $10,000, at an interest rate of 6%, beginning June 30, 2016. The note is due December 31, 2017. No payments have been made on the note and no extensions have been entered into subsequent to December 31, 2017, resulting in the note being in default. 2,000,000 2,000,000 Accounts Receivable Factoring Agreement McCoy, Deane and Knott County secured accounts receivable note payable to a bank. The agreement calls for interest of .30% for each 10 days of outstanding balances. The advance is secured by the accounts receivable, corporate guaranty by the Company and personal guarantees by two officers of the Company. The agreement ends in October 2018 1,582,989 1,616,167 Kentucky New Markets Development Program Quest Processing - loan payable to Community Venture Investment XV, LLC, with interest only payments due quarterly until March 2023, at which time quarterly principal and interest payments are due. The note bears interest at 3.698554% and is due March 7, 2046. The loan is secured by all equipment and accounts of Quest Processing. See Note 4,117,139 4,117,139 Quest Processing - loan payable to Community Venture Investment XV, LLC, with interest only payments due quarterly until March 2023, at which time quarterly principal and interest payments are due. The note bears interest at 3.698554% and is due March 7, 2046. The loan is secured by all equipment and accounts of Quest Processing. See Note 1,026,047 1,026,047 Less: Debt Discounts and Loan Issuance Costs (475,333 ) (451,389 ) Affiliate Notes Notes payable to affiliate, due on demand with no interest and is uncollateralized. Equipment purchasing was paid by an affiliate resulting in the note payable. $ 74,000 $ 74,000 During July 2017, an officer of the Company advanced $50,000 to Quest. The advance is unsecured, non interest bearing and due on demand. $ 50,000 $ 0 14,850,842 9,469,947 Less: Current maturities 9,769,154 4,505,006 Total Long-term Debt $ 5,081,688 $ 4,964,941 |
Schedule of Future Minimum Lease Payments for Capital Leases | Payable In Loan Principal Lease Principal Total Loan and Lease Principal Lease Interest 2018 9,704,444 64,710 9,769,154 8,560 2019 312,707 125,798 438,505 3,722 2020 37,283 - 37,283 - 2021 10,491 - 10,491 - 2022 - - - - Thereafter 4,595,409 4,595,409 |
EQUITY TRANSACTIONS (Tables)
EQUITY TRANSACTIONS (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Equity Transactions | ||
Schedule of Stockholders' Equity Note, Warrants | 9/30/2018 Expected Dividend Yield 0% Expected volatility 120% Risk-free rate 1.4% Expected life of warrants 3-5 Years Weighted Weighted Average Average Aggregate Number of Exercise Contractual Intrinsic Warrants Price Life in Years Value Outstanding - December 31, 2017 5,364,230 $ 2.638 2.835 $ 138,069 Exercisable - December 31, 2017 5,364,230 $ 2.638 2.835 $ 138,069 Granted 886,830 $ 1.000 6.388 $ 5,386,975 Forfeited or Expired - - - - Exercised - $ - - - Outstanding - September 30, 2018 6,251,060 $ 2.432 2.474 $ 31,556,641 Exercisable - September 30, 2018 5,639,230 $ 2.590 1.982 $ 27,836,687 | Weighted Weighted Average Average Aggregate Number of Exercise Contractual Intrinsic Warrants Price Life in Years Value Outstanding – December 31, 2015 - - - - Exercisable - December 31, 2015 - - - - Granted - - - - Forfeited or Expired - - - - Outstanding - December 31, 2016 - - - - Exercisable - December 31, 2016 - - - - Granted 6,343,833 $ 2.317 2.706 $ 174,253 Forfeited or Expired 979,603 $ 0.560 1.997 $ 36,184 Exercised - - - - Outstanding - December 31, 2017 5,364,230 $ 2.638 2.835 $ 138,069 Exercisable - December 31, 2017 5,364,230 $ 2.638 2.835 $ 138,069 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Summary Of Significant Accounting Policies Details Abstract | ||||
Cash | $ 57,739 | $ 186,722 | $ 342,041 | $ 784,525 |
Restricted Cash | 286,043 | $ 198,943 | 189,012 | $ 141,102 |
Total cash and restricted cash presented in the consolidated statement of cash flows | $ 343,782 | $ 531,053 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Sep. 30, 2018 | Aug. 23, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Assets | ||||
Underground Mining Equipment | $ 9,346,692 | $ 8,887,045 | $ 7,500,512 | |
Land | 0 | 178,683 | $ 178,683 | |
Point Rock [Member] | ||||
Assets | ||||
Mining Rights | 2,151,823 | |||
Liabilities | ||||
Vendor Payables | 53,771 | |||
Asset Retirement Obligation | 2,098,052 | |||
Wayland [Member] | ||||
Assets | ||||
Mining Rights | 66,129 | |||
Liabilities | ||||
Asset Retirement Obligation | $ 66,129 | |||
KCC [Member] | ||||
Liabilities | ||||
Asset Retirement Obligation | $ 919,158 | |||
ICG Knott County [Member] | ||||
Assets | ||||
Cash | 2,380,000 | |||
Underground Mining Equipment | 1,533,937 | |||
Surface Mining Equipment | 206,578 | |||
Land | 178,683 | |||
Coal Preparation and Loading Facilities | 200,236 | |||
Liabilities | ||||
Asset Retirement Obligation | 4,499,434 | |||
McCoy [Member] | ||||
Assets | ||||
Cash | 2,935,800 | |||
Underground Mining Equipment | 531,249 | |||
Surface Mining Equipment | 36,218 | |||
Coal Preparation and Loading Facilities | 58,681 | |||
Liabilities | ||||
Asset Retirement Obligation | $ 3,561,848 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Details 2Abstract | ||||||
Beginning Balance | $ 19,885,057 | $ 18,126,873 | $ 18,126,873 | $ 8,586,464 | ||
Accretion Expense | $ 539,771 | $ 339,288 | 1,435,295 | $ 1,181,055 | 1,791,051 | 1,664,774 |
Reclamation work | 0 | (32,867) | (185,647) | |||
Asset disposition | (919,158) | |||||
Point Rock Acquisition | 2,098,052 | |||||
Wayland Acquisition | 66,129 | |||||
McCoy Acquisition | 0 | 3,561,848 | ||||
KCC Acquisition | 0 | 4,499,434 | ||||
Ending Balance | 22,565,375 | 22,565,375 | 19,885,057 | 18,126,873 | ||
Current portion of reclamation liability | 2,275,848 | 2,275,848 | 2,033,862 | 519,489 | ||
Long-term portion of reclamation liability | $ 20,289,527 | $ 20,289,527 | $ 17,851,195 | $ 17,607,384 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | May 10, 2018 | Aug. 23, 2018 | Apr. 21, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Gain on disposition | $ (807,591) | $ 0 | |||||||
Cash - restricted | $ 286,043 | $ 189,012 | 286,043 | 189,012 | $ 198,943 | $ 141,102 | |||
Asset management fee | 116,115 | 116,115 | 116,115 | ||||||
Annual asset management fees | 73,730 | 73,730 | 116,115 | ||||||
Lender reserve | 148,546 | 148,546 | 0 | ||||||
Funds held for others | 63,767 | 63,767 | 82,828 | 24,987 | |||||
Loss on settlement | 0 | (30,055) | 0 | $ (281,907) | 0 | (71,245) | |||
Allowance for trade receivables | 0 | 0 | 0 | 0 | |||||
Allowance for other accounts receivables | $ 0 | $ 0 | 92,573 | $ 640,000 | |||||
Discount rate | 10.00% | 10.00% | |||||||
Amortization expense | $ 179,318 | 0 | |||||||
KCC [Member] | |||||||||
Gain on disposition | $ 807,591 | ||||||||
Disposed of non-operating assets | 111,567 | ||||||||
Asset retirement obligation | $ 919,158 | ||||||||
KCC [Member] | Asset Acquisitions [Member] | |||||||||
Asset retirement obligation | $ 66,129 | ||||||||
Commitment contingences description | KCC entered into a royalty agreement with the seller to be paid only upon coal extraction in the amount of $1.50 per extracted ton of coal. | ||||||||
Acquired assets anticipated life years | 7 years | ||||||||
Capitalized mining rights amortized life years | 7 years | ||||||||
Amortization expense | 2,067 | $ 0 | |||||||
McCoy [Member] | |||||||||
Asset retirement obligation | $ 3,561,848 | ||||||||
McCoy [Member] | Asset Acquisitions [Member] | |||||||||
Mining Rights | $ 2,151,823 | ||||||||
Vendor Payables | 53,771 | ||||||||
Asset retirement obligation | $ 2,098,052 | ||||||||
Commitment contingences description | McCoy entered into a surface and mineral sub-lease in the amount of up to $4,000,000 to be paid only upon coal extraction at $2 per extracted ton of coal. | ||||||||
Acquired assets anticipated life years | 5 years | ||||||||
Capitalized mining rights amortized life years | 5 years | ||||||||
Annual royalty payable | $ 60,000 | ||||||||
Description for royalty payments | McCoy will also pay a portion of the sales price as royalty with an annual minimum payment of $60,000 starting in January 2019 | ||||||||
Point Rock [Member] | |||||||||
Mining Rights | 2,151,823 | $ 2,151,823 | |||||||
Vendor Payables | 53,771 | 53,771 | |||||||
Asset retirement obligation | 2,098,052 | 2,098,052 | |||||||
Wayland [Member] | |||||||||
Mining Rights | 66,129 | 66,129 | |||||||
Asset retirement obligation | $ 66,129 | $ 66,129 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative 1) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash | $ 186,722 | $ 784,525 | $ 0 | ||
Cash - restricted | $ 286,043 | $ 189,012 | 198,943 | 141,102 | |
Funds held for others | 63,767 | 82,828 | 24,987 | ||
Asset management fee | 116,115 | 116,115 | 116,115 | ||
Amortization of debt discount and debt issuance costs | 420,134 | $ 284,406 | 477,056 | 9,406 | |
Amortization expense 2018 | 11,520 | ||||
Amortization expense 2019 | 11,520 | ||||
Amortization expense 2020 | 11,520 | ||||
Amortization expense 2021 | 11,520 | ||||
Amortization expense 2022 | 11,520 | ||||
Allowance for trade receivables | 0 | 0 | 0 | ||
Allowance for other accounts receivables | $ 0 | 92,573 | 640,000 | ||
Outstanding stock warrants | $ 5,364,230 | $ 0 | |||
Accounts Receivable [Member] | Customers Credit Concentration Risk [Member] | |||||
Concentration Risk, Percentage | 63.00% | 78.00% | |||
Sales Revenue, Net [Member] | Customers Credit Concentration Risk [Member] | |||||
Concentration Risk, Percentage | 99.00% | 97.00% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Less: Accumulated depreciation | $ (6,600,108) | $ (4,820,569) | $ (2,262,855) |
Total Property and Equipment, Net | 12,118,730 | 11,117,184 | 12,081,816 |
Land [Member] | |||
Property and equipment | 0 | 178,683 | 178,683 |
Processing and Rail Facilities [Member] | |||
Property and equipment | 2,802,855 | 2,914,422 | 2,914,422 |
Surface Equipment [Member] | |||
Property and equipment | 4,532,724 | 3,957,603 | 3,751,054 |
Mining Rights [Member] | |||
Property and equipment | 2,036,567 | 0 | |
Underground Equipment [Member] | |||
Property and equipment | $ 9,346,692 | $ 8,887,045 | $ 7,500,512 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details 1) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Processing and Rail Facilities [Member] | ||
Estimated useful lives | 20 years | 5 years |
Surface Equipment [Member] | ||
Estimated useful lives | 7 years | 20 years |
Underground Equipment [Member] | ||
Estimated useful lives | 5 years | 7 years |
Mining Rights [Member] | ||
Estimated useful lives | 5 years |
PROPERTY AND EQUIPMENT (Detai_3
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Depreciation expense | $ (649,983) | $ (697,214) | $ (1,779,539) | $ (1,856,442) | $ (2,557,714) | $ (2,262,855) |
Mining Rights [Member] | ||||||
Depreciation expense | $ 181,385 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Beginning Balance | $ 14,726,842 | ||
During the nine-month period ended September 30, 2018 net repayments to the factoring agreement totaled $787,435. | 787,435 | ||
Total increases to debt | 7,683,053 | ||
Less cash payments | (2,064,902) | ||
In May 2018, an unrelated party forgave $315,000 of the $540,000 equipment loan agreement dated September 30, 2016. | (315,000) | ||
Issuance discount | (752,535) | $ 490,000 | |
Amortization of issuance cost and loan discounts | 420,134 | ||
Debt Ending Balance | 19,697,592 | 14,726,842 | |
Less current portion | 14,625,099 | ||
Total long-term debt at September 30, 2018 | 5,072,493 | $ 14,850,842 | $ 9,469,947 |
Notes Payable One [Member] | ARC Business Loan [Member] | |||
Total increases to debt | 2,450,000 | ||
Notes Payable Two [Member] | Equipment Loan [Member] | |||
Total increases to debt | 346,660 | ||
Notes Payable Three [Member] | Equipment Loan [Member] | |||
Total increases to debt | 135,000 | ||
Notes Payable Four [Member] | Loan Agreement [Member] | |||
Total increases to debt | 1,000,000 | ||
Notes Payable Five [Member] | Financing Arrangement [Member] | |||
Total increases to debt | $ 2,963,958 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Long-term debt | $ 5,072,493 | $ 14,850,842 | $ 9,469,947 |
Less: Debt Discounts and Loan Issuance Costs | (475,333) | (451,389) | |
Less: Current maturities | 9,769,154 | 4,505,006 | |
Total Long-term Debt | $ 5,072,493 | 5,081,688 | 4,964,941 |
Note payable 1 [Member] | Affiliate Notes [Member] | |||
Long-term debt | 50,000 | 0 | |
Note payable 1 [Member] | Equipment Loans - QEI [Member] | |||
Long-term debt | 57,290 | 64,175 | |
Note payable 1 [Member] | Kentucky New Markets Development Program [Member] | |||
Long-term debt | 1,026,047 | 1,026,047 | |
Note payable 1 [Member] | Equipment Loans - McCoy [Member] | |||
Long-term debt | 135,000 | 0 | |
Note payable 1 [Member] | Equipment Loans ERC [Member] | |||
Long-term debt | 128,254 | 161,738 | |
Note payable [Member] | Affiliate Notes [Member] | |||
Long-term debt | 74,000 | 74,000 | |
Note payable [Member] | Equipment Loans - QEI [Member] | |||
Long-term debt | 30,962 | 50,235 | |
Note payable [Member] | Kentucky New Markets Development Program [Member] | |||
Long-term debt | 4,117,139 | 4,117,139 | |
Note payable [Member] | Accounts Receivable Factoring Agreement [Member] | |||
Long-term debt | 1,582,989 | 1,616,167 | |
Note payable [Member] | Seller Note - Deane [Member] | |||
Long-term debt | 2,000,000 | 2,000,000 | |
Note payable [Member] | Business Loans - McCoy [Member] | |||
Long-term debt | 66,667 | 0 | |
Note payable [Member] | Equipment Loans - McCoy [Member] | |||
Long-term debt | 540,000 | 540,000 | |
Note payable [Member] | Business Loan - ARC [Member] | |||
Long-term debt | 4,444,632 | 175,000 | |
Note payable [Member] | Equipment Loans ERC [Member] | |||
Long-term debt | 27,288 | 35,644 | |
Note payable 2 [Member] | Equipment Loans - QEI [Member] | |||
Long-term debt | 460,000 | 0 | |
Note payable 2 [Member] | Equipment Loans - McCoy [Member] | |||
Long-term debt | 22,500 | 0 | |
Note payable 2 [Member] | Equipment Loans ERC [Member] | |||
Long-term debt | 36,890 | 60,541 | |
Note payable 3 [Member] | Equipment Loans - QEI [Member] | |||
Long-term debt | 88,297 | 0 | |
Note payable 3 [Member] | Equipment Loans - McCoy [Member] | |||
Long-term debt | 330,000 | 0 | |
Note payable 4 [Member] | Equipment Loans - QEI [Member] | |||
Long-term debt | 51,320 | 0 | |
Note payable 5 [Member] | Equipment Loans - QEI [Member] | |||
Long-term debt | $ 56,900 | $ 0 |
NOTES PAYABLE (Details 2)
NOTES PAYABLE (Details 2) | Dec. 31, 2017USD ($) |
Loan Principal [Member] | |
2,018 | $ 9,704,444 |
2,019 | 312,707 |
2,020 | 37,283 |
2,021 | 10,491 |
2,022 | 0 |
Thereafter | 4,595,409 |
Lease Principal [Member] | |
2,018 | 64,710 |
2,019 | 125,798 |
2,020 | 0 |
2,021 | 0 |
2,022 | 0 |
Thereafter | 0 |
Total Loan and Lease Principal [Member] | |
2,018 | 9,769,154 |
2,019 | 438,505 |
2,020 | 37,283 |
2,021 | 10,491 |
2,022 | 0 |
Thereafter | 4,595,409 |
Lease Interest [Member] | |
2,018 | 8,560 |
2,019 | 3,722 |
2,020 | 0 |
2,021 | 0 |
2,022 | 0 |
Thereafter | $ 0 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) | Dec. 04, 2017USD ($) | Sep. 08, 2017USD ($) | Jun. 12, 2017USD ($) | May 02, 2017USD ($) | Mar. 13, 2013 | Oct. 20, 2017USD ($) | Oct. 19, 2017USD ($) | Sep. 25, 2017USD ($) | Nov. 30, 2016USD ($) | Oct. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)Integer$ / sharesshares | Dec. 31, 2016USD ($) | Oct. 04, 2017USD ($) | Jul. 31, 2017USD ($) |
Principal payments on long term debt | $ 2,064,902 | $ 318,576 | $ 392,002 | $ 303,706 | |||||||||||||||
Proceeds from new debt issuance | 5,909,650 | 5,824,816 | |||||||||||||||||
Proceeds from long term debt | 5,316,977 | 1,670,000 | 4,440,000 | 4,857,391 | |||||||||||||||
Equipment for notes payable | 906,660 | 1,222,500 | 1,419,650 | 904,425 | |||||||||||||||
Proceeds from the factoring agreement | 32,985 | 1,616,067 | |||||||||||||||||
Cash proceeds | 200,000 | ||||||||||||||||||
Amortized discount | 455,000 | ||||||||||||||||||
Unamortized discount | 35,000 | ||||||||||||||||||
Debt discount | (752,535) | 490,000 | |||||||||||||||||
Underground equipment | $ 9,346,692 | 9,346,692 | 8,887,045 | 7,500,512 | |||||||||||||||
Surface equipment cost | 4,532,724 | 4,532,724 | $ 3,957,603 | 3,751,054 | |||||||||||||||
Interest rate | 7.00% | ||||||||||||||||||
Interest expense | $ 305,655 | $ 342,683 | $ 864,104 | $ 567,970 | $ 558,772 | 283,564 | |||||||||||||
First Note [Member] | |||||||||||||||||||
Debt instrument maturity date | Jan. 17, 2016 | ||||||||||||||||||
Kentucky New Markets Development Program [Member] | |||||||||||||||||||
Proceeds from long term debt | 4,490,000 | 4,688,152 | |||||||||||||||||
Equipment for notes payable | 1,419,650 | 967,425 | |||||||||||||||||
Note payable 2 [Member] | Equipment Loans - McCoy [Member] | Equipment purchase agreement [Member] | |||||||||||||||||||
Underground equipment | $ 250,000 | ||||||||||||||||||
Debt instrument maturity date | Sep. 12, 2017 | ||||||||||||||||||
Note payable 2 [Member] | Equipment Loans - QEI [Member] | Equipment purchase agreement [Member] | |||||||||||||||||||
Equipment for notes payable | $ 80,000 | ||||||||||||||||||
Underground equipment | 600,000 | ||||||||||||||||||
Note payable monthly payments | $ 30,000 | ||||||||||||||||||
Note payable 2 [Member] | Equipment Loans - QEI [Member] | Equipment financing agreement [Member] | |||||||||||||||||||
Surface equipment cost | $ 90,400 | ||||||||||||||||||
Interest rate | 9.95% | ||||||||||||||||||
Debt instrument maturity date | Oct. 19, 2019 | ||||||||||||||||||
Note payable 2 [Member] | Equipment Loans ERC [Member] | |||||||||||||||||||
Note payable monthly payments | $ 2,031 | ||||||||||||||||||
Interest rate | 5.25% | ||||||||||||||||||
Debt instrument maturity date | Aug. 13, 2019 | ||||||||||||||||||
Number of instalments | Integer | 48 | ||||||||||||||||||
Note payable 4 [Member] | Equipment Loans - McCoy [Member] | Equipment purchase agreement [Member] | |||||||||||||||||||
Underground equipment | $ 350,000 | ||||||||||||||||||
Note payable monthly payments | $ 20,000 | ||||||||||||||||||
Note payable 4 [Member] | Equipment Loans - QEI [Member] | Equipment financing agreement [Member] | |||||||||||||||||||
Surface equipment cost | $ 56,900 | ||||||||||||||||||
Debt instrument maturity date | Jan. 7, 2021 | ||||||||||||||||||
Note payable 3 [Member] | Equipment Loans - McCoy [Member] | Equipment purchase agreement [Member] | |||||||||||||||||||
Underground equipment | $ 22,500 | ||||||||||||||||||
Debt instrument maturity date | Sep. 12, 2017 | ||||||||||||||||||
Note payable 3 [Member] | Equipment Loans - QEI [Member] | Equipment financing agreement [Member] | |||||||||||||||||||
Surface equipment cost | $ 50,250 | ||||||||||||||||||
Interest rate | 10.60% | ||||||||||||||||||
Debt instrument maturity date | Oct. 20, 2019 | ||||||||||||||||||
Note payable [Member] | Equipment Loans - McCoy [Member] | |||||||||||||||||||
Equipment for notes payable | $ 315,000 | ||||||||||||||||||
Note payable monthly payments | $ 150,000 | $ 150,000 | $ 150,000 | ||||||||||||||||
Note payable [Member] | Equipment Loans - QEI [Member] | |||||||||||||||||||
Note payable monthly payments | $ 2,064 | ||||||||||||||||||
Interest rate | 8.75% | ||||||||||||||||||
Debt instrument maturity date | Mar. 31, 2019 | ||||||||||||||||||
Note payable [Member] | Equipment Loans ERC [Member] | |||||||||||||||||||
Note payable monthly payments | $ 771 | ||||||||||||||||||
Interest rate | 5.25% | ||||||||||||||||||
Debt instrument maturity date | Jun. 30, 2019 | ||||||||||||||||||
Number of instalments | Integer | 48 | ||||||||||||||||||
Note payable [Member] | Business Loans - McCoy [Member] | |||||||||||||||||||
Note payable monthly payments | $ 23,000 | ||||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||||
Debt instrument maturity date | Jan. 1, 2018 | ||||||||||||||||||
Notes payable in advance | $ 200,000 | ||||||||||||||||||
Note payable [Member] | Business Loan - ARC [Member] | Consolidated loan agreement [Member] | |||||||||||||||||||
Amortized discount | 105,000 | ||||||||||||||||||
Debt discount | $ 140,000 | ||||||||||||||||||
Interest rate | 7.00% | ||||||||||||||||||
Debt instrument maturity date | Oct. 2, 2020 | ||||||||||||||||||
Notes payable in advance | $ 1,300,000 | $ 5,444,632 | |||||||||||||||||
Issue of warrant | shares | 5,017,006 | ||||||||||||||||||
Discount on notes | $ 35,000 | ||||||||||||||||||
Note payable [Member] | Business Loan - ARC [Member] | Consolidated loan agreement [Member] | Minimum [Member] | |||||||||||||||||||
Exercise price of warrant | $ / shares | $ 0.01 | ||||||||||||||||||
Note payable [Member] | Business Loan - ARC [Member] | Consolidated loan agreement [Member] | Maximum [Member] | |||||||||||||||||||
Exercise price of warrant | $ / shares | $ 11.44 | ||||||||||||||||||
Note payable [Member] | Accounts Receivable Factoring Agreement [Member] | |||||||||||||||||||
Debt instrument maturity date | Oct. 31, 2018 | ||||||||||||||||||
Accounts receivable factoring agreement description | The agreement calls for interest of .30% for each 10 days of outstanding balances. | ||||||||||||||||||
Note payable [Member] | Kentucky New Markets Development Program [Member] | Community Venture Investment XV, LLC [Member] | |||||||||||||||||||
Interest rate | 3.6985% | ||||||||||||||||||
Debt instrument maturity date | Mar. 7, 2046 | ||||||||||||||||||
Note payable [Member] | Affiliate Notes [Member] | Officer [Member] | |||||||||||||||||||
Notes payable in advance | $ 50,000 | ||||||||||||||||||
Note payable 1 [Member] | Equipment Loans - QEI [Member] | |||||||||||||||||||
Note payable monthly payments | $ 1,468 | ||||||||||||||||||
Interest rate | 6.95% | ||||||||||||||||||
Debt instrument maturity date | Mar. 31, 2021 | ||||||||||||||||||
Note payable 1 [Member] | Equipment Loans ERC [Member] | |||||||||||||||||||
Note payable monthly payments | $ 3,304 | ||||||||||||||||||
Interest rate | 5.25% | ||||||||||||||||||
Debt instrument maturity date | Jun. 30, 2019 | ||||||||||||||||||
Number of instalments | Integer | 40 | ||||||||||||||||||
Note payable 1 [Member] | Kentucky New Markets Development Program [Member] | Community Venture Investment XV, LLC [Member] | |||||||||||||||||||
Interest rate | 3.6985% | ||||||||||||||||||
Debt instrument maturity date | Mar. 7, 2046 | ||||||||||||||||||
Promissory note payable [Member] | Seller Note - Deane [Member] | |||||||||||||||||||
Note payable monthly payments | $ 10,000 | ||||||||||||||||||
Interest rate | 6.00% | ||||||||||||||||||
Debt instrument maturity date | Dec. 31, 2017 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Mar. 13, 2013 | Apr. 30, 2017 | Jul. 17, 2013 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued related party management fee | $ 0 | $ 0 | $ 17,840,615 | $ 17,840,615 | ||||
Royalty expense | $ 64,537 | |||||||
Due to affiliates | $ 512,378 | $ 0 | $ 0 | $ 0 | ||||
First Note [Member] | ||||||||
Line of credit amount | $ 150,000 | |||||||
Interest rate | 12.00% | |||||||
Secuured debt due date | Sep. 13, 2015 | |||||||
Second Note [Member] | ||||||||
Line of credit amount | $ 100,000 | |||||||
Interest rate | 12.00% | |||||||
Secuured debt due date | Jan. 17, 2016 | |||||||
Secured Debt [Member] | ||||||||
Purchase of related party note receivable in exchange for Equity | $ 250,000 |
RELATED PARTY TRANSACTIONS (D_2
RELATED PARTY TRANSACTIONS (Details Narrative 1) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consulting fees - related party | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 12,340,615 |
Accrued related party management fee | $ 0 | 0 | 17,840,615 | 17,840,615 | ||
Principal balance of note | 74,000 | $ 74,000 | ||||
Proceeds from related party | $ 0 | $ 50,000 | $ 50,000 | |||
On January 1, 2016 [Member] | ||||||
Stock options awarded | 857,464 | |||||
On January 1, 2016 [Member] | Series A Preferred Stock [Member] | ||||||
Stock options awarded | 290,513 |
VARIABLE INTEREST ENTITY (Detai
VARIABLE INTEREST ENTITY (Details Narrative) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Variable Interest Entity Details Narrative | |
Note bears due date | 2,026 |
Variable interest entity, amount | $ 130,145 |
KENTUCKY NEW MARKETS DEVELOPM_2
KENTUCKY NEW MARKETS DEVELOPMENT PROGRAM (Details Narrative) - USD ($) | 1 Months Ended | |||
Mar. 18, 2016 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Note Receivable | $ 4,117,139 | $ 4,117,139 | $ 4,117,139 | |
ERC Mining LLC [Member] | ||||
Note Receivable | $ 4,117,139 | |||
Interest on note receivable | 4.00% | |||
Note receviable due date | Mar. 7, 2046 | |||
Payments of interest quterly due date | Mar. 18, 2023 | |||
Quest Processing [Member] | ||||
Total loan amount | $ 5,143,186 | |||
Payment of debt issuance | 460,795 | |||
Net proceeds for loan cost | $ 4,682,391 | |||
Description for company rights | The Company retains the right to call $5,143,186 of the loans in March 2023. | |||
Income tax credits value | $ 2,005,843 |
MANAGEMENT AGREEMENT (Details N
MANAGEMENT AGREEMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Advances made in connection with management agreement | $ 99,582 | $ 75,000 | $ 77,800 | $ 1,845,902 | ||
Receipt of previously impaired receivable | $ 0 | $ 117,657 | 92,573 | 241,574 | $ 387,427 | $ 0 |
Management Agreement [Member] | ||||||
Advances made in connection with management agreement | 99,582 | 75,000 | ||||
Receipt of previously impaired receivable | 127,957 | 394,645 | ||||
Amount receivable under agreement | $ 313,114 | $ 0 |
MANAGEMENT AGREEMENT (Details_2
MANAGEMENT AGREEMENT (Details Narrative 1) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Advances made in connection with management agreement | $ (99,582) | $ (75,000) | $ (77,800) | $ (1,845,902) |
Advance repayment in connection with management agreement | 222,304 | $ 469,645 | 625,227 | 1,175,000 |
Offsetting liability | $ 63,767 | 82,828 | 24,987 | |
ERC [Member] | ||||
Advances made in connection with management agreement | 77,800 | 1,975,000 | ||
Advance repayment in connection with management agreement | 625,227 | 1,175,000 | ||
Received of previously impaired amount | 387,427 | |||
Total fee earned | 240,000 | 240,000 | ||
Payment of equipment | 192,432 | 258,096 | ||
Offsetting liability | $ 82,828 | $ 24,987 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Deferred tax assets | $ 4,152,800 |
Net operating loss carryforwards | $ 4,152,800 |
Expire date | 2,035 |
Minimum [Member] | |
Corporate income tax rate | 21.00% |
Maximum [Member] | |
Corporate income tax rate | 34.00% |
EQUITY TRANSACTIONS (Details)
EQUITY TRANSACTIONS (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Expected Dividend Yeild | 0.00% | 0.00% |
Expected volatility | 120.00% | 13.73% |
Risk-free rate | 1.40% | 1.62% |
Minimum [Member] | ||
Expected life of warrants | 3 years | 2 years |
Maximum [Member] | ||
Expected life of warrants | 7 years | 3 years |
EQUITY TRANSACTIONS (Details 1)
EQUITY TRANSACTIONS (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Equity Transactions Details 1 | |||
Beginning Outstanding | 5,364,230 | 0 | 0 |
Beginning Exercisable | 5,364,230 | 0 | 0 |
Granted | 886,830 | 6,343,833 | 0 |
Forfeited or Expired | 0 | 979,603 | 0 |
Exercised | 0 | 0 | 0 |
Ending Outstanding | 6,251,060 | 5,364,230 | 0 |
Ending Exercisable | 5,639,230 | 5,364,230 | 0 |
Weighted Average Exercise Price | |||
Beginning Outstanding | $ 2.638 | $ 0 | $ 0 |
Beginning Exercisable | 2.638 | 0 | 0 |
Granted | 1 | 2.317 | 0 |
Forfeited or Expired | 0 | 0.56 | 0 |
Exercised | 0 | 0 | 0 |
Ending Outstanding | 2.432 | 2.638 | 0 |
Ending Exercisable | $ 2.590 | $ 2.638 | $ 0 |
Weighted Average Contractual Life in Years | |||
Weighted average remaining contractual terms of share beginning outstanding | 2 years 9 months 29 days | ||
Weighted average remaining contractual terms of share beginning exercisable | 2 years 9 months 29 days | ||
Weighted average remaining contractual terms of share granted | 6 years 4 months 17 days | 2 years 8 months 15 days | |
Weighted average remaining contractual terms of forfeited or Expired | 0 years | 1 year 29 months 27 days | |
Weighted average remaining contractual terms of share Exercised | 0 years | ||
Weighted average remaining contractual terms of share outstanding | 2 years 5 months 20 days | 2 years 10 months | |
Weighted average remaining contractual terms of share exercisable | 1 year 11 months 23 days | 2 years 10 months | |
Aggregate Intrinsic Value | |||
Beginning Outstanding | $ 138,069 | $ 0 | $ 0 |
Beginning Exercisable | 138,069 | 0 | 0 |
Granted | 5,386,975 | 174,253 | 0 |
Forfeited or Expired | 0 | 36,184 | 0 |
Exercised | 0 | 138,069 | 0 |
Ending Outstanding | 31,556,641 | 138,069 | 0 |
Ending Exercisable | $ 27,836,687 | $ 138,069 | $ 0 |
EQUITY TRANSACTIONS (Details Na
EQUITY TRANSACTIONS (Details Narrative) - USD ($) | Sep. 14, 2018 | Sep. 12, 2018 | Jul. 05, 2017 | May 10, 2017 | Jul. 18, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued dividend on Series B | $ 104,157 | $ 0 | $ 0 | ||||||
Warrant and option compensation expense | 448,727 | ||||||||
Stock based compensation | 201,250 | 10,000 | 50,000 | 88,675 | |||||
Option expenses | $ 13,410 | $ 0 | $ 0 | $ 0 | |||||
Mr. Marlin Molinaro [Member] | |||||||||
Stock issued during period, shares | 45,000 | ||||||||
Stock issued during period, value | $ 62,250 | ||||||||
Warrant [Member] | |||||||||
Option exercise price | $ 3.60 | $ 3.60 | |||||||
Stock based compensation | $ 10,000 | ||||||||
Warrant [Member] | Mr. Marlin Molinaro [Member] | |||||||||
Stock option issued | 75,000 | ||||||||
Option expiration date | Sep. 14, 2023 | ||||||||
Warrant and option compensation expense | $ 234,067 | ||||||||
Stock based compensation | 36,205 | ||||||||
Unamortized expense | 181,250 | ||||||||
Warrant granted | 234,067 | ||||||||
Employee Incentive Stock Option Plan [Member] | |||||||||
Stock option issued | 636,830 | ||||||||
Option expiration date | Sep. 10, 2025 | ||||||||
Option exercise price | $ 1 | ||||||||
Option vested | 25,000 | ||||||||
Option outstanding | 611,830 | ||||||||
Fair value of stock option and warrants | 482,751 | ||||||||
Option expenses | 13,410 | ||||||||
Unamortized expense | 469,342 | ||||||||
Redstone Communications LLC [Member] | |||||||||
Stock issued during period, shares | 105,000 | ||||||||
Stock issued during period, value | $ 152,250 | ||||||||
Redstone Communications LLC [Member] | Warrant [Member] | |||||||||
Stock option issued | 175,000 | ||||||||
Sylva International LLC [Member] | |||||||||
Stock issued during period, shares | 150,000 | ||||||||
Stock issued during period, value | $ 165,000 | ||||||||
Stock based compensation | $ 165,000 |
EQUITY TRANSACTIONS (Details _2
EQUITY TRANSACTIONS (Details Narrative 1) - USD ($) | Jul. 05, 2017 | May 10, 2017 | Apr. 02, 2017 | Mar. 07, 2017 | Mar. 13, 2013 | Mar. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 30, 2017 | Feb. 22, 2017 | Jan. 31, 2016 | Dec. 31, 2015 | Jul. 17, 2013 |
Stock or Unit Option Plan Expense | $ 13,410 | $ 0 | $ 0 | $ 0 | |||||||||||||
Warrants | 5,364,230 | 0 | |||||||||||||||
Compensation expense | 201,250 | 10,000 | $ 50,000 | 88,675 | |||||||||||||
Expected life of warrants | 2 years | ||||||||||||||||
Common stock, for proceeds | $ 500,000 | ||||||||||||||||
Equity, Description | Such put option expires after 20 days from notification. | ||||||||||||||||
Terms of conversion feature | The Series B Preferred Stock converts into common stock of the Company at the holder's discretion at a conversion price of $3.60 per common share (one share of Series B Preferred converts to common at a ratio of 0.27778). Furthermore, the Series B Preferred share purchase agreement provides for certain adjustments to the conversion value of the Series B Preferred to common shares of the Company that are based on the EBITDA (earning before interest, taxes, depreciation, and amortization) for the Company for the 12 months ended March 31, 2018. Those adjustments provide for a decrease in the conversion value based on the proportional miss of the Company's EBITDA, up to a maximum of 30.0% decrease in the conversion value of the Series B Preferred to common shares. | ||||||||||||||||
Preferred dividend requirement | $ (17,000) | $ 0 | $ (104,157) | $ 0 | $ (53,157) | 0 | |||||||||||
Stock based compensation expense | $ 0 | $ 88,675 | |||||||||||||||
Stock Option Plan [Member] | |||||||||||||||||
Issuance of shares | 6,363,225 | ||||||||||||||||
Conversion option [Member] | |||||||||||||||||
Issuance of shares | 33,334 | ||||||||||||||||
Note payable | $ 50,000 | ||||||||||||||||
Conversion price | $ 1.50 | ||||||||||||||||
Discount on note payable | $ 50,000 | ||||||||||||||||
Series B Preferred Stock [Member] | |||||||||||||||||
Preferred stock shares issued | 850,000 | 850,000 | 850,000 | 850,000 | |||||||||||||
Series A Preferred Stock [Member] | |||||||||||||||||
Cashlessly shares exercised | 2,267,362 | ||||||||||||||||
Preferred stock shares issued | 4,817,792 | 4,817,792 | 4,817,792 | 4,817,792 | |||||||||||||
Series A Preferred Stock [Member] | 2016 Plan [Member] | |||||||||||||||||
Issuance of shares | 6,363,225 | ||||||||||||||||
Warrant [Member] | |||||||||||||||||
Warrants | $ 40,000 | ||||||||||||||||
Class of warrants or rights issued | 33,333 | 8,334 | |||||||||||||||
Common stock shares issued | 13,333 | ||||||||||||||||
Compensation expense | $ 10,000 | ||||||||||||||||
Expected life of warrants | 3 years | ||||||||||||||||
Exercise price | $ 3.60 | $ 3.60 | |||||||||||||||
Maturity date | May 9, 2020 | ||||||||||||||||
Exercise price of warrant | $ 3.60 | ||||||||||||||||
Warrant [Member] | ARC Business Loan [Member] | |||||||||||||||||
Common stock shares issued | 979,603 | ||||||||||||||||
Common stock shares issuable upon exercise of warrants or rights | 5,996,609 | ||||||||||||||||
Maturity date | Oct. 2, 2020 | ||||||||||||||||
Warrant [Member] | ARC Business Loan [Member] | Minimum [Member] | |||||||||||||||||
Exercise price of warrant | $ 0.01 | $ 11.44 | |||||||||||||||
Preferred Stock A | |||||||||||||||||
Common stock shares issued | 4,817,792 | 4,817,792 | 2,550,430 | ||||||||||||||
Preferred Stock B | |||||||||||||||||
Common stock shares issued | 850,000 | 0 | 0 | ||||||||||||||
Common Stock | |||||||||||||||||
Common stock shares issued | 892,044 | 0 | 0 | ||||||||||||||
First Note [Member] | |||||||||||||||||
Maturity date | Jan. 17, 2016 | ||||||||||||||||
Line of credit amount | $ 150,000 | ||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Second Note [Member] | |||||||||||||||||
Line of credit amount | $ 100,000 | ||||||||||||||||
Interest rate | 12.00% | ||||||||||||||||
Private Placement [Member] | Series B Preferred Stock [Member] | |||||||||||||||||
Proceeds from the sale of preferred stock | $ 500,000 | ||||||||||||||||
Private Placement [Member] | Series B Preferred Stock [Member] | April 2, 2019 [Member] | |||||||||||||||||
Warrants | $ 27,778 | ||||||||||||||||
Exercise price | $ 7.20 | ||||||||||||||||
Private Placement [Member] | Series B Preferred Stock [Member] | A Expire March 6, 2020 [Member] | |||||||||||||||||
Class of warrants or rights issued | 138,889 | ||||||||||||||||
Exercise price | $ 7.60 | ||||||||||||||||
Private Placement [Member] | Series B Preferred Stock [Member] | A-1 Expire March 6, 2020 [Member] | |||||||||||||||||
Warrants | $ 69,445 | ||||||||||||||||
Exercise price | $ 0.003 | ||||||||||||||||
Private Placement [Member] | Series B Preferred Stock [Member] | April 29, 2019 [Member] | |||||||||||||||||
Exercise price | $ 7.20 | ||||||||||||||||
Private Placement [Member] | Series B Preferred Stock [Member] | TwentyNineAprilTwoThousandNinteenMember | |||||||||||||||||
Warrants | $ 69,445 | ||||||||||||||||
Private Placement [Member] | ARC [Member] | |||||||||||||||||
Purchase price per share | $ 1 | ||||||||||||||||
Proceeds from the sale of preferred stock | $ 100,000 | ||||||||||||||||
Private Placement [Member] | ARC [Member] | Series B Preferred Stock [Member] | |||||||||||||||||
Issuance of shares | 500,000 | ||||||||||||||||
Purchase price per share | $ 1 | ||||||||||||||||
Common stock shares issuable upon exercise of warrants or rights | 27,778 | 208,334 | |||||||||||||||
Preferred stock shares issued | 100,000 | ||||||||||||||||
Common stock, for proceeds | $ 500,000 | ||||||||||||||||
Private placement agreement [Member] | |||||||||||||||||
Amount of secured debt purchased from unrelated debt holder of related party | $ 250,000 | ||||||||||||||||
Private placement agreement [Member] | ARC [Member] | Series B Preferred Stock [Member] | |||||||||||||||||
Common stock shares issuable upon exercise of warrants or rights | 69,445 | ||||||||||||||||
Preferred stock shares issued | 250,000 |
CONTINGENCIES (Details Narrativ
CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 14, 2018 | |
Future annual rent | $ 6,000 | ||
Rent expense | $ 26,000 | $ 26,000 | |
Annual rent Maturity date | through 2,021 | ||
Redstone Communications LLC [Member] | Mr. Marlin Molinaro [Member] | |||
Monthly fee | $ 25,000 | ||
Quarterly stock fee | 150,000 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Nov. 13, 2018 | Nov. 07, 2018 | Nov. 05, 2018 | Oct. 24, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 30, 2018 |
Option exercised | 0 | 0 | 0 | |||||
Subsequent Event [Member] | ||||||||
Option exercised | 69,420 | |||||||
Debt due amount | $ 300,000 | |||||||
Debt due rate of interest | 7.00% | |||||||
Subsequent Event [Member] | Officer [Member] | ||||||||
Due from related party | $ 13,500 | |||||||
Series A Preferred Stock [Member] | Subsequent Event [Member] | ||||||||
Conversion of stock, shares converted | 4,336,012 | |||||||
CommonStock [Member] | Subsequent Event [Member] | ||||||||
Trade payables conversion shares issued, shares | 6,000 | |||||||
Trade payables conversion shares issued, value | $ 36,000 | |||||||
Series B Preferred Stock [Member] | Subsequent Event [Member] | ||||||||
Conversion of stock, shares converted | 267,859 | |||||||
Wyoming County Coal LLC [Member] | Subsequent Event [Member] | ||||||||
Consideration for acquired assets in, reclamation bonds | $ 234,240 | |||||||
Consideration for acquired assets in, common stock | 1,727,273 | |||||||
Consideration for acquired assets in, seller note | $ 350,000 | |||||||
Consideration for acquired assets in, seller note one | $ 250,000 |
SUBSEQUENT EVENTS (Details Na_2
SUBSEQUENT EVENTS (Details Narrative 1) - Subsequent Event [Member] - USD ($) | Apr. 13, 2018 | Apr. 06, 2018 | Jan. 25, 2018 | Dec. 31, 2018 | Mar. 29, 2018 |
Quest [Member] | |||||
Payments to acquire mining equipment | $ 75,000 | ||||
Payments due to acquire mining equipment | $ 60,000 | ||||
SurfaceEquipmentsMember | Quest [Member] | |||||
Credit facility maximum borrowing capacity | $ 346,660 | $ 135,000 | |||
Maturity date | Dec. 25, 2020 | ||||
ARC Business Loan [Member] | Unaffiliated entity [Member] | |||||
Amount receivable under agreement | $ 1,300,000 |