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): May 12, 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 May 12, 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 first quarter of 2021 (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.
| ExhibitNo. | Description |
|---|---|
| 99.1 | Earnings Release Dated May 12, 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: May 12,<br>2021 | By: | /s/ Mark C.<br>Jensen |
| Mark C.<br>Jensen | ||
| Chief Executive<br>Officer |
arec_ex991
Exhibit 99.1
American Resources Corporation Reports First Quarter 2021 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 Wednesday, May 12 at 4:30 PM ET
May 12, 2021 | Source: American Resources Corporation
FISHERS, INDIANA / ACCESSWIRE / May 12, 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 first quarter of 2021 financial results and provided a corporate update.
Mark Jensen, Chairman and CEO of American Resources Corporation commented, “Over the course of the first quarter of 2021, we had the opportunity to continue to position our dynamic platform to provide the infrastructure and electrification marketplaces the resources needed to advance to a greener economy. We’ve had one of the most active three months to date in terms of transforming our Company. We had the opportunity to further define our suite of technology that has brought together some of the best and most innovative universities and chemical engineers that have developed technologies and processes that enable us to capture, process and purify critical and rare earth elements, and do it in the most environmentally safe, and in certain instances environmentally positive, methods ever developed. We are confident that our process chain is at the forefront of establishing a sustainable and healthy supply chain of critical materials here in the United States and redefine how these materials are sourced across the globe. Our milestones and announcement over the first quarter are groundbreaking and demonstrate our commitment to bring these technologies to the market as expeditiously and efficiently as possible.”
First Quarter 2021 Key Highlights
●
Secured base load sales commitment for production of raw materials servicing the infrastructure marketplace at its Perry County Resources (“PCR”) mining complex.
●
Entered into exclusive patent and technology licensing agreements and sponsored research agreements with Penn State University and its Department of Energy and Mineral Engineering to implement Penn State’s intellectual property and technologies that separate and extract pre-concentrate critical and rare earth minerals from the Company’s carbon-based resources.
●
Acquired exclusive rights for ligand assisted displacement (“LAD”) chromatography patents and knowhow, developed at Purdue University, to further expanded its capability in environmentally friendly separation and purification of rare earth elements. This technology is specific to the processing of separated and pure rare earth metals and critical elements from coal byproducts, recycled permanent magnets and lithium-ion batteries.
●
Acquired additional production equipment to expand its base of carbon production and efficiencies at Perry County Resources as well as prepare for the potential opportunity to bring other complexes online in the future.
●
Engaged technology veteran William E. Smith III to lead the design, build and operation phase of its rare earth and critical mineral purification facilities utilizing ligand assisted displacement (“LAD”) chromatography technology. Mr. Smith spent thirty-three years at Eli Lilly and Co. (NYSE:LLY) overseeing technical support of their worldwide manufacturing facilities and responsible for worldwide planning, design, and construction of capital projects.
●
Entered into exclusive license agreement with Ohio University for a suite of technologies developed by Dr. Gerardine Botte, the current Whitacre Department Chair in Chemical Engineering at Texas Tech University, to be used for rare earth element (“REE”) and critical mineral separation as well as the future production of graphene and advanced carbon products.
●
Advanced the commercialization process of its rare earth element technology process chain with commencement of building a 2kW mobile rare earth processing electrolysis facility in conjunction with the Company’s sponsored research program with Dr. Gerardine Botte and Texas Tech University. The facility represents a novel approach for the revalorization of coal, coal waste, and coal byproducts such as fly ash for the production of REE concentrate, carbon, purified fly ash and hydrogen.
●
Priced the initial public offering of American Acquisition Opportunity Inc. (NADSAQ: AMAOU), a blank check company in which the Company has an indirect investment, consisting of 10,000,000 units at $10.00 per unit. AMAOU is focusing its search on land and resource holding companies, with the potential to create, support, and/or innovate for the new economy.
●
Sub-licensed, on a non-exclusive basis, two of its exclusive patents for the production of graphene to Novusterra Inc. for a 50% equity stake in the privately-held company and a portion of future cash flows from the sale of graphene from that entity.
●
Further improved the Company’s balance sheet and capital structure through the payoff and / or conversion into equity of an additional $10.3 million of outstanding debt throughout the first three 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, American Carbon, with one of the largest metallurgical carbon growth platforms in the industry, is back producing high quality carbon to supply the steel and alloy metals industry with the necessary resources to support worldwide infrastructure demand. We are seeing that demand grow as economic activity continues to materialize as the world emerges from the COVID-19 pandemic. We are seeing numerous opportunities to expand our production base to fulfill that demand and are confident in our position in being a stable, long-term supplier of these essential resources. As such, we remain comfortable with our previously stated guidance of $55 million to $75 million in revenues for 2021 as a whole,” continued Mr. Jensen.
“As previously stated, we’ve had the opportunity to further define our suite of technologies relevant to rare earth and critical mineral production over the past few months. We are aggressively advancing these initiatives, specifically relating to our electrolysis processing and chromatography purification technologies and are very excited for what these technologies can accomplish for our shareholders and stakeholders. Lastly, I think it’s important to mention the additional valuation creation we’ve recently accomplished and will continue to foster. First, the pricing of our Company-sponsored SPAC, American Acquisition Opportunity Inc. has the potential to drive meaningful value creation for our shareholders. The quality of potential targets we are evaluating is certainly impressive. Also, our sub-license agreement with Novusterra Inc., for the development of graphene, demonstrates the value of our acquired intellectual property and our commitment to deliver that value to our shareholders.”
Conference Call Information
American Resources management will host a conference call for investors, analysts and other interested parties on Wednesday, May 12, 2021 at 4:30 PM ET.
Interested participants and investors may access the conference call by dialing (877) 407-4019 and referencing American Resources Corporation’s First Quarter of 2021 Conference Call, or by the webcast link: here.
Financial Results for First Quarter 2021
For the first quarter of 2021, American Resources reported a net income loss of $6.4 million, or $0.14 per share for the three months ended March 31, 2021, as compared with a net income loss of $3.4 million, or a loss of $0.12 per share in the prior-year period. The Company earned adjusted earnings before interest, taxes, depreciation, amortization, equity-based compensation, warrant expense and development and restructuring costs (“Adjusted EBITDA”) of a $2.8 million loss in the first quarter of 2021, as compared with an Adjusted EBITDA loss of $847,187 for the first quarter of 2020.
First Quarter 2021 Summary
Total revenues were $10,646 for the first quarter of 2021 compared to revenues of $524,334 during the first quarter of 2020. General and administrative expenses for the first quarter of 2021 were $1.1 million compared to $842,925 million in the prior year period. American Resources incurred interest expense of $491,113 during the first quarter of 2021 compared to $500,640 during the first quarter of 2020. Development costs during the quarter were $1.8 million, compared to $2.8 million in the fourth quarter of 2020.
The Company did not incur any income tax expense in the first quarter of 2021 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 | ||
| UNAUDITED | ||
| For the three<br>months ended | For the three<br>months ended | |
| --- | --- | --- |
| March<br>31,<br><br><br>2021 | March<br>31,<br><br><br>2020 | |
| Coal<br>Sales | $3,274 | $524,334 |
| Royalty<br>Income | 7,372 | - |
| Total<br>Revenue | 10,646 | 524,334 |
| Cost of Coal Sales<br>and Processing | (800,515) | (1,855,187) |
| Accretion<br>Expense | (305,636) | (370,587) |
| Depreciation | (393,530) | (915,052) |
| Amortization of<br>Mining Rights | (311,685) | (313,224) |
| General and<br>Administrative | (1,081,447) | (842,925) |
| Professional<br>Fees | (710,032) | (194,046) |
| Production Taxes<br>and Royalties | (568,182) | (160,230) |
| Development<br>Costs | (1,811,951) | (128,159) |
| Total Operating<br>expenses | (5,982,978) | (4,779,410) |
| Net Loss from<br>Operations | (5,972,332) | (4,255,076) |
| Other Income and<br>(expense) | ||
| Other<br>Income | 35,296 | 1,412,005 |
| Amortization of<br>debt discount and debt issuance costs | (2,879) | - |
| Interest<br>Income | 41,171 | 82,343 |
| Interest<br>expense | (491,113) | (500,640) |
| Total Other income<br>(expense) | (417,525) | 993,708) |
| Net loss<br>attributable to American Resources Corp. Shareholders | $(6,389,857) | $(3,261,368) |
| Net loss per common<br>share - basic and diluted | $(0.14) | $(0.12) |
| Weighted average<br>common shares outstanding- basic and diluted | 46,917,910 | 27,267,197 |
| AMERICAN RESOURCES<br>CORPORATION | ||
| --- | ||
| CONSOLIDATED BALANCE SHEETS | ||
| UNAUDITED | ||
| March<br>31,<br><br><br>2021 | December<br>31,<br><br><br>2020 | |
| --- | --- | --- |
| ASSETS | ||
| CURRENT<br>ASSETS | ||
| Cash | $7,097,465 | $10,617,495 |
| Accounts<br>Receivable | 3,274 | 38,650 |
| Inventory | 150,504 | 150,504 |
| Prepaid<br>fees | 241,668 | 175,000 |
| Accounts Receivable<br>- Other | 234,240 | 234,240 |
| Total Current<br>Assets | 7,727,149 | 11,215,889 |
| OTHER<br>ASSETS | ||
| Cash -<br>restricted | 1,233,708 | 583,708 |
| Processing and rail<br>facility | 11,591,273 | 11,591,273 |
| Underground<br>equipment | 7,403,417 | 6,838,417 |
| Surface<br>equipment | 2,527,576 | 2,527,576 |
| Acquired mining<br>rights | 561,575 | 561,575 |
| Coal refuse<br>storage | 12,134,192 | 12,134,192 |
| Less Accumulated<br>Depreciation | (13,432,024) | (12,726,809) |
| Land | 1,572,435 | 1,572,435 |
| Investment in LLC<br>– Related Party | 2,275,000 | - |
| Note<br>Receivable | 4,117,139 | 4,117,139 |
| Total Other<br>Assets | 29,984,291 | 27,199,506 |
| TOTAL<br>ASSETS | $37,711,440 | $38,415,395 |
| LIABILITIES<br>AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||
| CURRENT<br>LIABILITIES | ||
| Accounts<br>payable | $3,049,695 | $4,288,794 |
| Non-Trade<br>Payables | 3,476,236 | 3,850,781 |
| Accounts payable<br>– related party | 712,872 | 679,146 |
| Accrued<br>interest | 247,271 | 1,043,519 |
| Due to<br>affiliate | 74,000 | 74,000 |
| Current portion of<br>long term-debt (net of unamortized discount of $- and<br>$-) | 5,805,453 | 10,997,692 |
| Convertible note<br>payables – short term (net of unamortized discount of<br>$234,184 and $-) | 10,906,144 | - |
| Current portion of<br>reclamation liability | 2,327,169 | 2,327,169 |
| Total Current<br>Liabilities | 26,598,840 | 23,261,101 |
| OTHER<br>LIABILITIES | ||
| Long-term portion<br>of note payable (net of issuance costs of $402,788 and<br>$405,667) | 5,033,631 | 5,330,752 |
| Convertible note<br>payables – long term (net of unamortized discount of $829,650<br>and $1,854,421) | 2,593,703 | 14,300,907 |
| Reclamation<br>liability | 15,833,772 | 15,528,135 |
| Total Other<br>Liabilities | 23,461,106 | 35,159,794 |
| Total<br>Liabilities | 50,059,946 | 58,420,895 |
| STOCKHOLDERS’<br>EQUITY (DEFICIT) | ||
| AREC - Class A<br>Common stock: $.0001 par value; 230,000,000 shares authorized,<br>50,014,410 and 40,522,762 shares issued and<br>outstanding | 4,984 | 4,256 |
| 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 | 127,440,638 | 113,279,448 |
| Accumulated<br>deficit | (139,794,126) | (133,289,247) |
| Total<br>Stockholders’ Equity (Deficit) | (12,348,504) | (20,005,500) |
| TOTAL<br>LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $37,711,442 | $38,415,395 |
| AMERICAN RESOURCES CORPORATION | ||
| --- | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| UNAUDITED | ||
| For the three<br>months ended | For the three<br>months ended | |
| --- | --- | --- |
| March<br>31,<br><br><br>2021 | March<br>31,<br><br><br>2020 | |
| Cash<br>Flows from Operating activities: | ||
| Net<br>loss | $(6,389,855) | $(3,261,368) |
| Adjustments<br>to reconcile net loss to net cash used in operating<br>activities: | ||
| Depreciation | 393,530 | 915,052 |
| Amortization of<br>mining rights | 311,685 | 313,224 |
| Accretion<br>expense | 305,636 | 370,587 |
| Reduction of ARO<br>liability due to sale of assets | - | (312,338) |
| Warrant<br>expense | 115,025 | 115,025 |
| Issuance of common<br>share options for compensation | 147,000 | - |
| Amortization of<br>beneficial conversion feature | 590,464 | - |
| Issuance of common<br>shares for services | 188,000 | - |
| Change<br>in current assets and liabilities: | ||
| Accounts<br>receivable | 35,376 | 2,387,505 |
| Prepaid expenses<br>and other assets | (66,668) | (175,000) |
| Inventory | - | 365,126 |
| Accounts<br>payable | (1,613,645 | 555,516 |
| Accounts payable<br>– related party | 33,726 | 85,446 |
| Accrued<br>interest | (796,248) | (506,383) |
| Cash provided by<br>(used in) operating activities | (6,745,974) | 852,392 |
| Cash<br>Flows from Investing activities: | ||
| Cash paid for PPE,<br>net | (1,798,708) | (408,915) |
| Investment in<br>LLC | (2,275,000) | - |
| Cash provided by<br>(used in) investing activities | (4,073,708) | (408,915) |
| Cash<br>Flows from Financing activities: | ||
| Principal payments<br>on long term debt | (62,294) | (72,255) |
| Proceeds from long<br>term debt | - | 28,000 |
| Issuance of common<br>shares for debt and payable conversion | 1,997,514 | - |
| Payments on<br>factoring agreement, net | - | (1,807,443) |
| Proceeds from<br>convertible note | 1,620,000 | 1,598,642 |
| Proceeds from<br>warrant conversions | 2,055,723 | - |
| Proceeds from sale<br>of common stock, net | 1,105,001 | - |
| Cash provided by<br>financing activities | 6,715,944 | (253,056) |
| Increase (decrease)<br>in cash and restricted cash | (4,103,738) | 190,421 |
| Cash and restricted<br>cash, beginning of period | 11,201,203 | 268,811 |
| Cash<br>and restricted cash, end of period | $7,097,465 | $459,232 |
| Supplemental<br>Information | ||
| Non-cash investing<br>and financing activities | ||
| Conversion of debt<br>and trade payables to common shares | $1,997,514 | $- |
| Discount on note<br>due to beneficial conversion feature | $715,740 | $- |
| Cash paid for<br>interest | $42,426 | $165,728 |
| Cash paid for<br>income taxes | $- | $- |
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP
| For the three months ended March 31, 2021 | For the three months ended March 31, 2020 | |
|---|---|---|
| Net<br>Income | (6,389,857) | (3,395,547) |
| Interest<br>& Other Expenses | 491,113 | 500,640 |
| Income<br>Tax Expense | - | - |
| Accretion<br>Expense | 305,636 | 370,587 |
| Depreciation | 393,530 | 915,052 |
| Amortization<br>of Mining Rights | 311,685 | 313,224 |
| Amortization<br>of Debt Discount & Issuance | 2,879 | - |
| Non-Cash<br>Stock & Option Comp. Expense | 147,000 | - |
| Non-Cash<br>Warrant Expense | 115,025 | 115,025 |
| Development<br>Costs | 1,811,951 | 128,159 |
| PCR<br>Restructuring Expenses | - | 205,673 |
| Total<br>Adjustments | 3,578,819 | 2,548,360 |
| Adjusted EBITDA(1) | (2,811,038) | (847,187) |
(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.
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
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Investor Contact:
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RedChip Companies Inc.
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Company Contact:
Mark LaVerghetta
Vice President of Corporate Finance and Communications
317-855-9926 ext. 0