8-K
American Resources Corp (AREC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest event Reported): March 11, 2021
AMERICAN RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
| Florida<br><br><br>(State<br>or other jurisdiction<br><br><br>of<br>incorporation) | 000-55456<br><br><br>(Commission<br><br><br>File<br>Number) | 46-3914127<br><br><br>(I.R.S.<br>Employer<br><br><br>Identification<br>No.) |
|---|
12115 Visionary Way, Suite 174, Fishers Indiana, 46038
(Address of principal executive offices)
(317) 855-9926
(Registrant’s telephone number, including area code)
________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See: General Instruction A.2. below):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On March 11, 2021, American Resources Corporation (or the “Company”) issued a press release to announce the reporting of the Company’s financial and operating results for the fourth quarter and full year 2020 (the “Earnings Release”), and to provide a business outlook.
The information presented in Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.
A copy of the press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are attached hereto and filed herewith.
| Exhibit No. | Description |
|---|---|
| 99.1 | Earnings Release Dated March 11, 2021 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| American Resources<br>Corporation | ||
|---|---|---|
| Date:<br>March<br>11, 2021 | By: | /s/ Mark C.<br>Jensen |
| Mark C.<br>Jensen | ||
| Chief Executive<br>Officer |
arec_ex991
Exhibit 99.1
American Resources Corporation Reports Fourth Quarter and Full Year 2020 Financial Results and Provides Business Outlook
Well-positioned to be a long-term supplier of raw material and critical elements to the modern-day infrastructure market
Near-term catalysts expected to drive significant growth and value
Balance sheet improvements provides financial strength and flexibility to execute on its innovation and growth plans
Company to host update conference call on Monday, March 15, 2021 at 8:30 AM ET
March 11, 2021 | Source: American Resources Corporation
FISHERS, INDIANA / ACCESSWIRE / March 11, 2021 / American Resources Corporation (NASDAQ:AREC) (“American Resources” or the “Company”), a next generation and socially responsible supplier of raw materials to the new infrastructure and electrification marketplace, today reported its fourth quarter of 2020 and full year ended December 31, 2020 financial results.
Mark Jensen, Chairman and CEO of American Resources Corporation commented, “2020 marked the most transformational year to date for American Resources as we demonstrated our ability to be innovators and, what we believe to be, first movers in our industry in order to catalyze our asset base. Our broad and dynamic platform is positioned for near term inflection points and the beginning of a new era to where we are positioned to provide the infrastructure and electrification marketplaces the resources needed to advance to a greener economy. Furthermore, the game changing technology we have acquired enables us capture, process and purify critical and rare earth elements in the most environmentally safe methods while using feedstocks that do not require traditional mining-based extraction while cleaning up environmental issues.”
2020 Key Highlights
●
Announced the launch of the Company’s wholly owned subsidiary, American Rare Earth LLC (“ARE”), which is utilizing over 15 patents and technologies developed at 5 leading universities to capture, process and purify critical and REE’s from coal waste, coal byproducts, waste permanent magnets and waste lithium-ion batteries. Additionally, the Company appointed Dr. Gerardine Botte, the Whitacre Department Chair in Chemical Engineering at Texas Tech University to its Board of Directors as an independent director to help guide and assist the Company and ARE to meet the needs of the green infrastructure market.
●
Raised $13 million in October 2020 through issuing 5.2 million Class A common shares to secure additional cash liquidity to execute its innovation and growth initiatives.
●
Further advanced the Company’s ESG efforts through various initiatives that have redefined the legacy mining industry including: the launch of American Metals that has worked in conjunction with the Company’s environmental efforts to shut down and cleanup irrational thermal coal mining sites and decommissioned railcars to be processed and recycled; received a prestigious Sentinels of Safety Award from the National Mining Association in recognition of its outstanding safety performance while also establishing the foundation for over 300 sustainable jobs within its operating region; and innovated its rare earth division to benefit the environment creating a process chain to minimize mining-based extraction, reduce, reuse and recycle waste material for their REE chemical composition; bring economic diversification to a distress region of the nation and help restore the REE supply chain of the United States.
●
Improved the Company’s balance sheet and capital structure through the payoff and / or conversion into equity of approximately $8.9 million of outstanding debt as of the end of 2020 and have subsequently paid off and / or converted into equity approximately an additional $10.01 million of debt throughout the first two months of 2021. Additionally, the Company realized the exercise of approximately 2.1 million outstanding cash warrants during the fourth quarter of 2020 and a subsequent exercise of approximately 1.4 million cash warrants during the first two months of 2021.
“Looking forward to the remainder of 2021 and beyond, we have never been more excited about the opportunities that lie ahead of us throughout all of our operating divisions. First and foremost, we see a tremendous opportunity for American Rare Earth to innovate and redefine how REEs can be supplied to the electrification, green infrastructure, technology and defense industries from domestic sources in an environmentally positive way. American Carbon, with one of the largest metallurgical carbon growth platforms in the industry, is set to scale its operation throughout this year and beyond to supply the steel and alloy metals industry with the necessary resources to support worldwide infrastructure demand. We remain comfortable with our previously stated guidance of $55 million to $75 million in revenues for 2021 as a whole,” continued Mr. Jensen. “An additional value-driving milestone was the Company’s sponsorship of American Acquisition Opportunity Inc., a specialty purpose acquisition company, will enable American Resources and its shareholders to benefit from the merger, innovation, synergies, and opportunities presented through this entity and allows for a broader scope of acquisition targets that may not directly fit within American Resources. Lastly, the improvements to our balance sheet and capital structure provide us with the financial strength and flexibility to execute on our exciting strategic growth plans, and we are confident that collectively we have the assets, technology processes, structure and team in place to execute.”
Conference Call Information
American Resources management will host a conference call for investors, analysts and other interested parties on Monday, March 15, 2021 at 8:30 AM ET.
To participate in the call, please dial (877) 407-4019 and reference the American Resources Conference Call, or click here for the “Call Me” option.
Financial Results for Fourth Quarter and Year-End December 31, 2020
For the full year of 2020, American Resources reported a net income loss of $10.26 million or a loss of $0.35 per share for the twelve months ended December 31, 2020, as compared with a net income loss $70.9 million or loss of $2.94 per share for the full year of 2019. The Company earned adjusted earnings before interest, taxes, depreciation, amortization, accretion on asset retirement obligations, non-operating expenses, non-cash impairment and development costs (‘adjusted EBITDA”) of $2.77 million for the year ended December 31, 2020, as compared with an adjusted EBITDA loss of $6.61 million in 2019.
For the fourth quarter of 2020, American Resources reported a net income loss of $9.1 million, or a loss of $0.25 per share, as compared with a net income loss of $40.0 million, or a loss of $1.66 per share, in the prior year period. The Company earned an adjusted EBITDA loss of $2.0 million in the fourth quarter of 2020, as compared with an adjusted EBITDA loss of $3.2 million for the fourth quarter of 2019.
Fourth Quarter 2020 Summary
Total revenues were $13,875 for the fourth quarter of 2020 compared to revenues of $6.3 million during the fourth quarter of 2019. General and administrative expenses for the fourth quarter of 2020 were $826,890 compared to $1.3 million in the prior year period. American Resources incurred interest expense of $1.5 million during the fourth quarter of 2020 compared to $1.2 million during the fourth quarter of 2019. Development costs during the quarter were $2.8 million, compared to $792,926 in the third quarter of 2020.
Full Year 2020 Summary
Full year 2020 revenues were $1,059,691 compared to full year 2019 revenues of $24.4 million. As previously stated the Company’s mining operations were idled for the year due to the disruptions related to global COVID-19 pandemic. The Company refocused its effort over the course of 2020 to reposition its asset base to broaden its scope with the launch of American Metals and American Rare Earth, while positioning American Carbon to better benefit as global markets are now rebounding and normalizing.
The Company did not incur any income tax expense in 2020 as it was able to utilize its available net operating losses (“NOL”) carried forward from prior periods of approximately $17.8 million as of December 31, 2020.
AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| Years ended<br>December 31, | ||
|---|---|---|
| 2020 | 2019 | |
| Coal<br>Sales | $524,334 | $24,456,831 |
| Processing Services<br>Income | - | 20,876 |
| Metal Recovery and<br>Sales | 535,357 | - |
| Total<br>Revenue | 1,059,691 | 24,477,707 |
| Cost of Coal Sales<br>and Processing | (3,749,519) | (26,086,814) |
| Accretion<br>Expense | (1,287,496) | (1,482,349) |
| Gain on purchase<br>and disposal of asset, respectively | - | 394,484 |
| Depreciation | (2,298,703) | (4,588,136) |
| Amortization of<br>mining rights | (1,251,357) | (1,657,673) |
| General and<br>Administrative | (2,486,799) | (5,113,688) |
| Professional<br>Fees | (1,076,548) | (6,750,848) |
| Production Taxes<br>and Royalties | (1,357,749) | (4,222,175) |
| Impairment of Fixed<br>Assets | - | (27,688,030) |
| Development<br>Costs | (3,998,885) | (7,236,652) |
| Total Expenses from<br>Operations | (17,507,056) | (84,431,881) |
| Net Loss from<br>Operations | (16,447,365) | (59,954,174) |
| Other<br>Income | 20,538 | 2,072,861 |
| (Loss)/Gain on<br>settlement of note payable and accounts payable | - | (22,660) |
| Gain on Interest<br>Forgiven | 832,500 | |
| Gain on<br>Depreciation Recapture | 1,706,569 | |
| Gain on Sale of<br>Stock | 6,820,949 | |
| Amortization of<br>debt discount and debt issuance costs | (11,516) | (7,725,076) |
| Interest<br>Income | 205,857 | 164,686 |
| Warrant<br>modification expense | - | (2,545,360) |
| Interest<br>expense | (3,383,294) | (2,908,579) |
| Net<br>Loss | (10,255,762) | (70,918,302) |
| Less: Net income<br>attributable to Non Controlling Interest | - | - |
| Net loss<br>attributable to American Resources Corporation<br>Shareholders | $(10,255,762) | $(70,918,302) |
| Net loss per share<br>- basic and diluted | $(.35) | $(2.94) |
| Weighted average<br>shares outstanding | 29,359,993 | 24,094,420 |
AMERICAN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
| 2019 | |
| ASSETS | |
| CURRENT<br>ASSETS | |
| Cash | $3,324 |
| Accounts<br>Receivable | 2,424,905 |
| Inventory | 515,630 |
| Prepaid | - |
| Accounts Receivable<br>- Other | 234,240 |
| Total Current<br>Assets | 3,178,099 |
| OTHER<br>ASSETS | |
| Cash -<br>restricted | 265,487 |
| Processing and rail<br>facility | 12,723,163 |
| Underground<br>equipment | 8,294,188 |
| Surface<br>equipment | 3,224,896 |
| Mine<br>development | 669,860 |
| Coal Refuse<br>Storage | 12,171,271 |
| Less Accumulated<br>Depreciation | (11,162,622) |
| Land | 1,748,169 |
| Note<br>Receivable | 4,117,139 |
| Total Other<br>Assets | 32,051,551 |
| TOTAL<br>ASSETS | $35,229,650 |
| LIABILITIES<br>AND STOCKHOLDERS' DEFICIT | |
| CURRENT<br>LIABILITIES | |
| Accounts<br>payable | $11,044,479 |
| Non-Trade<br>Payables | - |
| Accounts payable -<br>related party | 718,156 |
| Accrued<br>interest | 2,869,763 |
| Funds held for<br>others | - |
| Due to<br>affiliate | 132,639 |
| Current portion of<br>notes payables (net of unamortized discount of 0 and<br>134,296) | 20,494,589 |
| Convertible note<br>payables | 7,419,612 |
| Current portion of<br>reclamation liability | 2,327,169 |
| Total Current<br>Liabilities | 45,006,407 |
| OTHER<br>LIABILITIES | |
| Long-term portion<br>of note payable (net of issuance costs 405,667 and<br>428,699) | 5,415,271 |
| Long-term portion<br>of convertible note payable (net of unamortized discount of 0 and<br>0) | - |
| Reclamation<br>liability | 17,512,613 |
| Total Other<br>Liabilities | 22,927,884 |
| Total<br>Liabilities | 67,934,291 |
| STOCKHOLDERS'<br>DEFICIT | |
| AREC - Class A<br>Common stock: .0001 par value; 230,000,000 shares | |
| authorized,<br>40,522,762 and 27,410,512 shares issued and outstanding for the<br>period end | 2,740 |
| AREC - Series A<br>Preferred stock: .0001 par value; 100,000 shares authorized, nil<br>and nil shares issued and outstanding | - |
| AREC - Series B<br>Preferred stock: .001 par value; 20,000,000 shares authorized, nil<br>and nil shares issued and outstanding, respectively | - |
| AREC - Series C<br>Preferred stock: .001 par value; 20,000,000 shares authorized, nil<br>and nil shares issued and outstanding | - |
| Additional paid-in<br>capital | 90,326,104 |
| Accumulated<br>deficit | (123,033,485) |
| Total Stockholders'<br>Deficit | (32,704,641) |
| TOTAL<br>LIABILITIES AND STOCKHOLDERS' DEFICIT | $35,229,650 |
All values are in US Dollars.
AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| 2020 | 2019 | |
|---|---|---|
| Cash<br>Flows from Operating activities: | ||
| Net<br>loss | $(10,255,762) | $(70,918,302) |
| Adjustments<br>to reconcile net income (loss) to net cash | ||
| Depreciation | 1,855,236 | 4,588,136 |
| Amortization of<br>mining rights | 939,672 | 1,657,673 |
| Accretion<br>expense | 1,287,496 | 1,482,349 |
| Liabilities reduced<br>due to sale of assets | (3,271,974) | - |
| Forgiveness of<br>debt | - | - |
| Gain on purchase of<br>assets | - | (394,484) |
| Impairment<br>loss | 27,688,030 | |
| Amortization of<br>debt discount and issuance costs | - | 7,725,076 |
| Recovery of<br>advances receivable | (177,686) | |
| Warrant<br>expense | - | 2,524,500 |
| Warrant<br>modification expense | - | 2,545,360 |
| Issuance of common<br>shares for services | 18,800 | 1,906,253 |
| Issuance of<br>warrants in conjunction with convertible notes | 1,223,700 | - |
| Loss on settlement<br>of accounts payable with common shares | 642,060 | 22,660 |
| Return of common<br>shares for property sale | (1,840,200) | - |
| Stock compensation<br>expense | 230,050 | 377,255 |
| Change<br>in current assets and liabilities: | ||
| Accounts<br>receivable | 2,386,255 | (1,000,917) |
| Prepaid expenses<br>and other assets | (175,000) | 147,826 |
| Inventory | 365,126 | (351,830) |
| Accounts<br>payable | (4,301,976 | 1,164,080 |
| Account payable<br>related party | (97,649) | 243,502 |
| Funds held for<br>others | (79,662) | |
| Accrued<br>interest | (1,826,244) | 1,643,075 |
| Cash used in<br>operating activities | (13,847,255) | (19,207,106) |
| Cash<br>Flows from Investing activities: | ||
| Advances made in<br>connection with management agreement | - | - |
| Advance repayment<br>in connection with management agreement | - | - |
| Cash received<br>(paid) for PPE, net | 417,857 | (327,250) |
| Cash received from<br>acquisitions | - | 650,000 |
| Cash provided by<br>investing activities | 417,857 | 322,750 |
| Cash<br>Flows from Financing activities: | ||
| Principal payments<br>on long term debt | (1,103,191) | (2,059,484) |
| Proceeds from long<br>term debt (net of issuance costs $0 and $0) | 28,000 | 8,660,527 |
| Proceeds from<br>convertible debt | 14,411,949 | 599,980 |
| Proceeds from<br>related party | (9,861) | |
| Net (payments)<br>proceeds from factoring agreement | (1,807,443) | 1,489,508 |
| Sale of common<br>stock for cash | 12,832,475 | 7,767,698 |
| Proceeds series C<br>preferred stock | - | - |
| Cash provided by<br>financing activities | 24,361,790 | 16,448,368 |
| Increase (decrease)<br>in cash | 10,932,392 | (2,435,988) |
| Cash, beginning of<br>year | 268,811 | 2,704,799 |
| Cash,<br>end of year | $11,201,203 | $268,811 |
| Supplemental<br>Information | ||
| Assumption of net<br>assets and liabilities for asset acquisitions | $- | $6,623,999 |
| Shares issues in<br>asset acquisition | $- | $24,400,000 |
| Discount on note<br>due to beneficial conversion feature | $- | $7,362,925 |
| Conversion of note<br>payable to common stock | $- | $231,661 |
| Issuance of shares<br>as part of note payable consideration | $- | $297,831 |
| Conversion of<br>Preferred Series A Shares to common shares | $- | $161 |
| Conversion of<br>Preferred Series C Shares to common shares | $- | $1 |
| Return of shares<br>related to employee settlement | $- | $11 |
| Warrant exercise<br>for common shares | $- | $60 |
| Cash paid for<br>interest | $327,239 | $557,663 |
| Cash paid for<br>income tax | $- | $- |
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP
| For the<br>three months ended Dec. 31, 2020 | For the<br>twelve months ended Dec. 31, 2020 | For the<br>three months ended Dec. 31, 2019 | For the<br>twelve months ended Dec. 31, 2019 | |
|---|---|---|---|---|
| Net<br>Income | (9,097,560) | (10,255,762) | (40,047,544) | (70,918,302) |
| Interest<br>& Other Expenses | 2,908,579 | 3,383,294 | 1,233,926 | 2,908,579 |
| Income<br>Tax Expense | - | - | - | - |
| Accretion<br>Expense | 305,636 | 1,287,496 | 519,650 | 1,482,349 |
| Depreciation | 443,467 | 2,298,703 | 1,551,389 | 4,588,136 |
| Amortization<br>of Mining Rights | 311,685 | 1,251,357 | 65,563 | 1,657,673 |
| Amortization<br>of Debt Discount & Issuance | 2,879 | 11,516 | 670,601 | 7,725,076 |
| Non-Cash<br>Stock & Option Comp. Expense | 115,026 | 345,076 | 131,869 | 2,283,478 |
| Non-Cash<br>Warrant Expense | - | - | - | 5,069,860 |
| Development<br>Costs | 2,770,552 | 3,998,885 | 1,324,063 | 7,236,652 |
| Non-Cash<br>Impairment | - | - | 27,688,030 | 27,688,030 |
| PCR<br>Restructuring Expenses | 225,269 | 452,743 | 3,669,164 | 3,669,164 |
| Total<br>Adjustments | 7,083,093 | 13,029,070 | 36,854,255 | 64,308,997 |
| Adjusted<br>EBITDA | (2,014,467) | 2,773,308 | (3,193,289) | (6,609,305) |
(1)
Adjusted EBITDA is defined as net income before net interest expense, income tax expense, accretion expense, depreciation, non-cash stock compensation expense, transaction and other professional fees, and development costs. Adjusted EBITDA is not a measure of financial performance in accordance with GAAP, and we believe items excluded from Adjusted EBITDA are significant to a reader in understanding and assessing our financial condition. Therefore, Adjusted EBITDA should not be considered in isolation, nor as an alternative to net income, income from operations, cash flow from operations or as a measure of our profitability, liquidity, or performance under GAAP. We believe that Adjusted EBITDA presents a useful measure of our ability to incur and service debt based on ongoing operations. Furthermore, similar measures are used by analysts to evaluate our operating performance. Investors should be aware that our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by others.
Use of Non-GAAP Financial Measures
This release contains the use of certain U.S. non-GAAP financial measures. These non-GAAP financial measures are provided as supplemental information for financial measures prepared in accordance with GAAP. Management believes that these non-GAAP financial measures provide additional insight into the performance of the Company, and reflect how management analyzes Company performance and compares that performance against other companies. These non-GAAP financial measures may not be comparable to other similarly titled measures used by other entities.
About American Resources Corporation
American Resources Corporation is a next-generation, environmentally and socially responsible supplier of high-quality raw materials to the new infrastructure market. The Company is focused on the extraction and processing of metallurgical carbon, an essential ingredient used in steelmaking, critical and rare earth minerals for the electrification market, and reprocessed metal to be recycled. American Resources has a growing portfolio of operations located in the Central Appalachian basin of eastern Kentucky and southern West Virginia where premium quality metallurgical carbon and rare earth mineral deposits are concentrated.
American Resources has established a nimble, low-cost business model centered on growth, which provides a significant opportunity to scale its portfolio of assets to meet the growing global infrastructure and electrification markets while also continuing to acquire operations and significantly reduce their legacy industry risks. Its streamlined and efficient operations are able to maximize margins while reducing costs. For more information visit americanresourcescorp.com or connect with the Company on
Facebook,
Twitter, and
LinkedIn.
Special Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties, and other important factors that could cause the Company’s actual results, performance, or achievements or industry results to differ materially from any future results, performance, or achievements expressed or implied by these forward-looking statements. These statements are subject to a number of risks and uncertainties, many of which are beyond American Resources Corporation’s control. The words “believes”, “may”, “will”, “should”, “would”, “could”, “continue”, “seeks”, “anticipates”, “plans”, “expects”, “intends”, “estimates”, or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Any forward-looking statements included in this press release are made only as of the date of this release. The Company does not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. The Company cannot assure you that the projected results or events will be achieved.
PR Contact
Precision Public Relations
Matt Sheldon
917-280-7329
matt@precisionpr.co
Investor Contact:
JTC Team, LLC
Jenene Thomas
833-475-8247
arec@jtcir.com
RedChip Companies Inc.
Todd McKnight
1-800-RED-CHIP (733-2447)
Info@redchip.com
Company Contact:
Mark LaVerghetta
Vice President of Corporate Finance and Communications
317-855-9926 ext. 0
investor@americanresourcescorp.com