TREND TECHNOLOGY CORP - FORM 10-Q

Attached files

file	filename
EX-32.1 - AMERICAS ENERGY CO 10Q, CERTIFICATION 906, CEO - TREND TECHNOLOGY CORP	aecoexh32_1.htm
EX-31.1 - AMERICAS ENERGY CO 10Q, CERTIFICATION 302, CEO - TREND TECHNOLOGY CORP	aecoexh31_1.htm
EX-32.2 - AMERICAS ENERGY CO 10Q, CERTIFICATION 906, CFO - TREND TECHNOLOGY CORP	aecoexh32_2.htm
EX-31.2 - AMERICAS ENERGY CO 10Q, CERTIFICATION 302, CFO - TREND TECHNOLOGY CORP	aecoexh31_2.htm
EXCEL - IDEA: XBRL DOCUMENT - TREND TECHNOLOGY CORP	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to __________

Commission file number: 000-50978

Americas Energy Company-AECo

(Exact name of small business issuer as specified in its charter)

Nevada	98-0343712
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

243 N. Peter Road

Knoxville, Tennessee 37823

(Address of principal executive offices)

(865) 238-0668

(Registrants telephone number, including area code)

____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company; as defined within Rule 12b-2 of the Exchange Act.

o Large accelerated filer o Accelerated filer o Non-accelerated filer x Smaller reporting company

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

The number of shares outstanding of each of the issuer's classes of common equity as of September 30, 2011: 88,862,983 shares of common stock.

Table of Contents

		Page
		Number
PART I	FINANCIAL INFORMATION	1

Item 1	Financial Statements - September 30, 2011	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations	2

	Condensed Consolidated Statements of Cash Flows	3

	Notes to the Consolidated Financial Statements	5

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4	Controls and Procedures	27

Part II	OTHER INFORMATION	28

Item 1	Legal Proceedings	28

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 3	Defaults Upon Senior Securities	28

Item 4	(Removed and Reserved)	28

Item 5	Other Information	28

Item 6	Exhibits	29

SIGNATURES		30

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

AMERICAS ENERGY COMPANY - AECo
CONDENSED CONSOLIDATED BALANCE SHEETS



	September 30			March 31,
	2011			2011
	(Unaudited)
ASSETS
Current assets
Cash	$	1,885		$	10,622
Other receivables		10,000			10,000
Prepaid royalties		32,500			-
Other prepaid expenses		73,392			23,329
Total current assets		117,777			43,951

Property, plant, and equipment - net		4,925,832			5,233,106

Other assets
Capitalized mining properties		17,738,756			17,628,588
Investment in unconsolidated subsidiary		250,000			250,000
Certificates of deposit - pledged		1,594,110			1,594,110
Goodwill		742,000			742,000
Total other assets		20,324,866			20,214,698

TOTAL ASSETS	$	25,368,475		$	25,491,755


LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable	$	512,394		$	466,130
Accrued expenses		237,428			93,051
Accrued interest		78,051			-
Loans payable - related party		15,000			-
Line of credit		194,450			277,419
Notes payable - related party		50,500			70,000
Current maturities of long-term debt		32,101			27,699
Current portion of capital lease obligations		14,320			13,943
Loans payable		1,198,685			1,198,685
Total current liabilities		2,332,929			2,146,927

Long-term liabiities
Convertible debenture, net of discount		846,292			-
Asset retirement obligations		1,036,785			1,339,573
Accrued officers' severance pay		4,867,826			-
Accrued royalty		7,443,430			7,291,321
Long-term portion of capital lease obligations		10,834			18,060
Long-term debt, net current maturities		836,867			853,764
Derivative and warrant liabilities		311,600			-
Total long-term liabilities		15,353,634			9,502,718

Total liabilities		17,686,563			11,649,645

Commitments and contingencies		-			-

Stockholder's equity
Common stock; $0.0001par value; 100,000,000 shares
authorized; 88,862,983 issued and outstanding at September 30, 2011		8,886			8,162
and 81,619,595 shares issued and outstanding on March 31, 2011
Additional paid in capital		27,472,808			24,836,380
Retained deficit		(19,799,782	)		(11,002,432	)
Total stockholder's equity		7,681,912			13,842,110

TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	25,368,475		$	25,491,755

See accompanying notes.

Table of Contents

AMERICAS ENERGY COMPANY - AECo
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Three Months Ended							For the Six Months Ended
		September 30,						September 30,
		2011			2010			2011			2010

REVENUES
Coal sales and related income		$	114,804		$	2,142,717		$	250,910		$	5,758,537
Other income			-			5,126			5,796			20,607
Total revenues			114,804			2,147,843			256,706			5,779,144

OPERATING EXPENSES
Cost of sales (exclusive of accretion, depreciation and depletion)			174,649			2,822,227			443,141			6,017,774
Accretion, depreciation and depletion			194,982			277,510			387,331			439,176
Compensation expense			600,577			962,766			7,193,270			4,024,452
Professional fees			89,859			189,048			282,207			278,395
General and administrative expenses			78,465			74,925			164,839			257,370
Total operating expenses			1,138,532			4,326,476			8,470,788			11,017,167

Loss from operations			(1,023,728	)		(2,178,633	)		(8,214,082	)		(5,238,023	)

OTHER INCOME (EXPENSES)
Interest income			3,340			8,854			8,782			17,937
Interest expense			(196,077	)		(501,129	)		(287,248	)		(854,635	)
Gain on disposition of assets			-			4,272			6,798			4,272
Change in fair value of derivative and warrant liabilities			155,496			-			(311,600	)		-
Net gain on modification of acquisition			-			12,763,252			-			12,763,252
Total other income (expenses)			(37,241	)		12,275,249			(583,268	)		11,930,826

INCOME (LOSS) BEFORE INCOME TAXES			(1,060,969	)		10,096,616			(8,797,350	)		6,692,803

PROVISION FOR INCOME TAXES			-			-			-			(718,150	)

NET INCOME (LOSS)		$	(1,060,969	)	$	10,096,616		$	(8,797,350	)	$	5,974,653

PER SHARE DATA
Basic and diluted income (loss) per common share		$	(0.01	)	$	0.14		$	(0.10)		$	0.08

Weighted average common shares outstanding			88,852,113			72,257,064			87,133,229			71,845,153

See accompanying notes.

Table of Contents

AMERICAS ENERGY COMPANY - AECo
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Six Months Ended
	September 30,
	2011			2010


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(8,797,350	)	$	5,974,653
Adjustment to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Accretion, depreciation and depletion		387,331			439,176
Shares issued for services		1,900,583			3,530,638
Amortization of discount on convertible debentures		159,791			50,617
Gain on acquisition modification		-			(12,763,252	)
Gain on disposition of assets		(6,798	)		(4,272	)
Change in fair value of derivative and warrant liabilities		311,600			-
Changes in operating assets and liabilities:
(Increase) in accounts receivable		-			(34,052	)
(Increase) in prepaid expenses		(82,563	)		(39,772	)
Decrease in deferred tax asset		-			718,150
Increase in accounts payable		46,263			1,563,233
Increase in accrued expenses		5,167,625			90,651
Accrued interest expense added to principal		78,551			640,653
Net cash provided (used in) operating activities		(834,967	)		166,423

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds on sale of assets		100,000			-
Purchase of equipment		(10,000	)		(179,345	)
Purchase of building and improvements		-			(47,599	)
Coal production costs		(653,145	)		(453,265	)
Loans to unrelated third party		-			(10,000	)
Other investment activities		-			(265,000	)
Net cash used in investing activities		(563,145	)		(955,209	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible debt		1,500,000			100,000
Proceeds from note payable		-			500,000
Proceeds from related party loans		45,000			-
Payment on related party loans		(50,000	)		-
Payment of obligation under capital lease		(6,849	)		(5,763	)
Payments on accrued royalties payable		-			(28,708	)
Payment on credit line		(86,281	)		-
Payment on note payable		(12,495	)		(13,996	)
Net cash provided by financing activities		1,389,375			551,533

NET (DECREASE) IN CASH AND CASH EQUIVALENTS		(8,737	)		(237,253	)

CASH AND CASH EQUIVALENTS - beginning of period		10,622			542,331

CASH AND CASH EQUIVALENTS - end of period	$	1,885		$	305,078

See accompanying notes.

Table of Contents

AMERICAS ENERGY COMPANY - AECo
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Interest paid	$	47,768	$	136,475

Income taxes paid	$	-	$	-


	Supplemental disclosures of non-cash investing and financing activities:

		During the six months ended September 30, 2011, the Company received $1,500,000
		through its convertible line of credit note. Under the terms of the agreement the Company
		issued warrants to purchase 1,000,000 shares of its common stock at $0.14 per share,
		warrants to purchase 1,000,000 shares of common stock at $0.20 per share, and
		warrants to purchase 1,000,000 shares of common stock at of $0.25 per share. Until
		the credit line is paid in full, the holder has the right to convert up to the maximum borrowing
		amount under the line of $2,000,000 into shares of the Company's common stock at a
		conversion price of $0.136815 per share. The Company recorded a total discount against
		the principal of of $813,499 which was allocated to the beneficial conversion feature of the
		note. The discount is being amortized over the term of the indebtedness. During the three
		and six months ended September 30, 2011, amortization on the discount totaled
		$109,215, and $159,791, respectively, which were charged to interest expense.

		In April 2011, the Company sold all of its oil properties to RJCC Group 1 and
		in accordance to the terms of the sale received the initial payment of $100,000.
		RJCC Group 1 is wholly owned by family members of the Company's management
		and therefore the recognized loss on the sale of $76,929 was charged to equity.

		In June 2011, the Company purchased mining equipment with a total cost of
		$35,000. In the purchase, the Company paid $10,000 and traded in used
		equipment valued at $25,000. The Company treated the trade-in as a sale and
		recorded a gain of $6,798 on the transaction.

		In May 2010, the Company purchased a commercial building for $975,000. Under the
		terms of the agreement, the Company made a down payment of $20,956 (See Note 8).

		In May 2010, the Company issued 25,000 shares of its common stock to a director
		as interest in connection with a $100,000 loan he made to the Company. The 25,000
		shares were valued at their respective market value on date of issuance totaling
		$32,000 which being amortized and charged to operations over the six month term
		of the loan. The director has the right to convert all or a portion of the $100,000
		loan into common shares of the Company at a conversion price of $0.75 per share.

See accompanying notes.

Table of Contents

AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations – Americas Energy Company – AECo (“the Company”) was incorporated under the name of Trend Technology Corporation in the State of Nevada on February 16, 2001. On October 14, 2009, the Company changed its name to Americas Energy Company-AECo in anticipation of the acquisition of Americas Energy Company “(AECO”).

Basis of Presentation – The accompanying unaudited interim consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"). Certain information and disclosures normally included in the annual financial statements prepared in accordance with the accounting principles generally accepted in the Unites States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2011 filed with the Commission on July 18, 2011. The results of operations for the six months ended September 30, 2011, are not necessarily indicative of the results that may be expected for the full year.

The accompanying consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America.

Principles of Consolidation - The accompanying condensed consolidated financial statements include the accounts of Americas Energy Company – AECo and its wholly owned subsidiary, Evans Coal Corp. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates of coal, oil and gas reserves, asset retirement obligations, and impairment on unproved properties are inherently imprecise and may change materially in the near term.

Cash and Cash Equivalents – The Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents. The Company maintains cash balances at one financial institution that is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of September 30, 2011, the Company’s cash balances did not exceed the FDIC limits.

Accounts Receivable – Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company evaluates the need for an allowance for doubtful accounts based on review of historical write-off experience and industry data. As of September 30, 2011, there was no allowance for doubtful accounts, since all of the Company’s receivables were either collected prior to quarter end.

Table of Contents

AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

Advanced Mining Royalties – Lease rights to coal lands are often acquired in exchange for royalty payments. Advance mining royalties are advance payments made to lessors under terms of mineral lease agreements that are recoupable against future production. These advance payments are deferred and charged to operations as the coal reserves are mined. The Company regularly reviews recoverability of advance mining royalties and establishes or adjusts the allowance for advance mining royalties as necessary using the specific identification method. In instances where advance payments are not expected to be offset against future production royalties, the Company establishes a provision for losses on the advance payments that have been paid and the scheduled future minimum payments are expensed and recognized as liabilities. Advance royalty balances are charged off against the allowance when the lease rights are either terminated or expire. The Company did not have any advanced royalties at September 30, 2011.

Property, Plant,and Equipment – Property, plant, and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method and with useful lives used in computing depreciation ranging from 3 to 20 years. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Expenditures for maintenance and repairs are charged to operations as incurred; additions, renewals and betterments are capitalized.

Coal Properties – Costs incurred to purchase, lease or otherwise acquire mineral properties are capitalized when incurred. Mine development costs are recorded at cost as incurred. The Company’s coal reserves are controlled either through direct ownership or through leasing arrangements, which generally last until the recoverable reserves are depleted. Depletion of reserves and amortization of mine development costs is computed using the units-of-production method over the estimated proven and probable recoverable tons.

The Company reviews its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. If impairment indicators are present and the future undiscounted cash flows are less than the carrying value of the assets, the carrying values are reduced to their estimated fair value.

Long-Lived Assets – The Company accounts for its long-lived assets in accordance with ASC Topic 360-10, "Accounting for the Impairment or Disposal of Long-Lived Assets." ASC Topic 360-10 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value or disposable value. As of September 30, 2011, the Company has determined that none of its long-term assets were impaired.

Intangible assets – Goodwill consists of the cost in excess of the fair value of the acquired net assets of the Company’s subsidiaries. Goodwill is subject to annual impairment tests which require the comparison of the fair value and carrying value of reporting units. The Company assesses the potential impairment of goodwill annually and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Upon completion of such annual review, if impairment is

Table of Contents

AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

found to have occurred, a corresponding charge will be recorded. The Company has determined that it has one reporting unit, and uses three generally accepted methods for estimating fair value of the reporting unit; the income approach, market approach and market capitalization to determine the overall fair value. There were no events or changes in circumstances during the six months ended September 30, 2011 that indicated to management that the carrying value of goodwill and the intangible asset may not be recoverable.

Asset Retirement Obligations –Minimum standards for mine reclamation have been established by various regulatory agencies and dictate the reclamation requirements at the Company’s operations. The Company’s asset retirement obligations consist principally of costs to reclaim acreage disturbed at surface operations and estimated costs to reclaim support acreage and perform other related functions at underground mines. The Company records these reclamation obligations at fair value in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. When the liability is initially recorded, the offset is capitalized by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. To settle the liability, the obligation is paid, and to the extent there is a difference between the liability and the amount of cash paid, a gain or loss upon settlement is recorded. The Company annually reviews its estimated future cash flows for its asset retirement obligations. See Note 10 for further disclosures related to the Company’s asset retirement obligations.

Income Taxes – Income taxes are accounted for under the asset and liability method in accordance with ASC Topic 740-10 "Accounting for Income Taxes." Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. When it is considered to be more likely than not that a deferred tax asset will not be realized, a valuation allowance is provided for the excess.

Revenue Recognition – The Company earns revenues primarily through the sale of coal, but also earns revenue from the leasing of its equipment. The Company recognizes revenues utilizing the following general revenue recognition criteria: 1) pervasive evidence of an arrangement exists; 2) delivery has occurred; 3) the price to the buyer is fixed or determinable; and 4) collectability is reasonably assured.

Delivery of coal sales is determined to be complete for revenue recognition purposes when title and risk of loss has passed to the customer in accordance with stated contractual terms and there is no future obligations related to the shipment. Title generally passes as the coal is loaded into transport carriers for delivery to the customer.

Table of Contents

AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

Pneumoconiosis (Black Lung) Benefits - The Company is required by federal and state statutes to provide benefits to employees for awards related to black lung. Charges are made to operations for state black lung claims. The Company recognizes on its balance sheet the amount of the Company’s unfunded Accumulated Benefit Obligation (“ABO”) at the end of the year. Amounts recognized in Accumulated other comprehensive income (loss) are adjusted out of Accumulated other comprehensive income (loss) when they are subsequently recognized as components of net periodic benefit cost.

Share-Based Compensation – The Company measures and records compensation expense for all share-based payment awards to consultants, employees and directors based on estimated fair values. Additionally, compensation costs for share-based awards are recognized over the requisite service period based on the grant-date fair value.

Loss Per Share – The Company reports earnings (loss) per share in accordance with ASC Topic 260-10, "Earnings per Share." Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Potential common shares at September 30, 2011 comprised of 12,000,000 Warrants and $1,578,051 of debt convertible into 11,534,196 shares of the Company’s common stock.

Convertible Debentures - If the conversion feature of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 “Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense or equity (if the debt is due to a related party), over the life of the debt using the effective interest method.

NOTE 2 – RECENT ACCOUNTING PRONOUNCMENTS

Fair Value Measurement

In January 2010, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update on fair value measurement disclosures. The new accounting guidance requires disclosures on significant transfers in and out of Levels 1 and 2 of the fair value hierarchy and gross presentation of Level 3 reconciliation components. It also clarifies two existing disclosure requirements regarding fair value disclosures by class of assets and liabilities rather than by major category and disclosures of valuation technique and the inputs used in determining fair value of each class of assets and liabilities for Levels 2 and 3 measurements. The accounting standards update is effective for reporting periods beginning after December 15, 2009, except for the gross presentation of the Level 3 reconciliation, which is effective for reporting periods beginning after December 15, 2010. With the exception of the gross presentation of the Level 3 reconciliation, the Company adopted the guidance as of January 1, 2010, and it did not have an impact on the Company’s consolidated financial position or results of operations. The Company adopted the guidance pertaining to the gross presentation of the Level 3 reconciliation as of January 1, 2011, and the adoption did not have an impact on the Company’s consolidated financial position or results of operations.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

In May 2011, the FASB issued new accounting guidance changing some fair value measurement principles, such as by prohibiting the application of a blockage factor in fair value measurements and only requiring the application of the highest and best use concept when measuring nonfinancial assets. The accounting guidance will require, for recurring Level 3 fair value measurements, disclosure of quantitative information about unobservable inputs used, a description of the valuation processes used and a qualitative discussion about the sensitivity of the measurements. The accounting guidance further requires new disclosures about the use of a nonfinancial asset measured or disclosed at fair value if its use differs from its highest and best use. In addition, entities must report the fair value hierarchy level of assets and liabilities not recorded at fair value but where fair value is disclosed. The accounting standards update will be effective for reporting periods beginning after December 15, 2011 and is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

Presentation of Other Comprehensive Income

In June 2011, the FASB issued an accounting standards update on the presentation of other comprehensive income. The new accounting guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in stockholders’ equity. The new standard allows companies to present net income and other comprehensive income either in one continuous statement or in two separate, but consecutive, statements. The accounting standards update will be effective for fiscal years beginning after December 15, 2011 and is not expected to have an impact on the Company’s consolidated financial position or results of operations.

Testing Goodwill for Impairment

In September 2011, the FASB issued an accounting standards update to simplify how entities test goodwill for impairment. The new accounting guidance provides an entity with an option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test under current accounting guidance. If an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. However, if an entity concludes otherwise, then it is required to perform the first step of the two-step impairment test. Also under this new accounting guidance, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test, but may resume performing the qualitative assessment in any subsequent period. The accounting standards update will be effective for reporting periods beginning after December 15, 2011 and is not expected to have a material impact on the Company’s consolidated financial position or results of operations.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a net loss of $8,797,350 for the six months ended September 30, 2011, In addition, at September 30, 2011, the Company had negative working capital of $2,215,152 and an accumulated deficit of $19.799,782.

These conditions give rise to doubt about the Company’s ability to continue as a going concern. These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to obtain additional financing or sale of its common stock as may be required and ultimately to attain profitability.

NOTE 4 – CONCENTRATION OF CREDIT RISK

During the six months ended September 30, 2011, two customers purchased approximately 44% and 40%, respectively, of Company’s total coal sales. During the six months ended September 30, 2010 significantly all of the Company’s revenues were derived from five customers of whom two customers purchased approximately 85% of the Company’s total coal sales for the period.

NOTE 5 – PROPERTY, PLANT, EQUIPMENT AND MINING DEVELOPMENT

Property, plant, and equipment at September 30, 2011 consist of the following:

	Useful
	Life

Land		$	244,348
Building and improvements	5 to 20 years		768,886
Mining and transportation equipment	5 to 10 years		4,736,521
Trucks held under capital leases	3 years		49,439
Office equipment	3 to 5 years		21,299
			5,820,493
Less accumulated depreciation and depletion			(894,661	)
		$	4,925,832

Depreciation expense for the three months ended September 30, 2011 and 2010 totaled $160,124 and $237,798, respectively. Depreciation expense for the six months ended September 30, 2011 and 2010 totaled $320,620 and $361,293, respectively.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

Mining properties at September 30, 2011 consisted of the following:

Mining properties	$	17,875,011
Less accumulated depletion		(136,255	)
	$	17,738,756

Depletion expense for the three months ended September 30, 2011 and 2010 totaled $2,361 and $11,242, respectively. Depletion expense for the six months ended September 30, 2011 and 2010 totaled $2,361 and $21,863, respectively.

In May 2011, the Company purchased a lease from unrelated third parties on property located on Gregory Branch in Knox County, Kentucky for $30,000. The $30,000 is included in the cost of mining properties. A new lease was entered into on May 25, 2011 between the land owners and the Company allowing the Company to mine the property for an initial term of five years. For coal mined by the underground mining method, royalties are payable equal to the greater of $3.00 per clean ton or 6% of gross selling price of the coal. For coal mined by the surface and auger and highwall mining method, royalties are payable equal to the greater of $3 per clean ton or 8% of the gross selling price of such coal. The lease provides for minimum royalties of $2,500 per year. The Company paid the first year’s minimum royalty which is included in prepaid royalties on the accompanying balance sheet. The term of the lease is five years and if at the end of the five year initial term, the Company is still mining the leased property under a valid permit, the Company can automatically extend the lease for an additional five years.

On August 3, 2011, the Company entered into a lease agreement to mine coal on acreage located on Possum Hollow in Knox County, Kentucky. For coal mined by the underground mining method, royalties are payable equal to the greater of $3.00 per clean ton or 6% of gross selling price of the coal. For coal mined by the surface and auger and highwall mining method, royalties are payable equal to the greater of $3 per clean ton or 8% of the gross selling price of such coal. The lease provides for minimum royalties of $30,000 which the Company paid. The $30,000 is included in prepaid royalties on the accompanying balance sheet. The term of the lease is five years and if at the end of the five year initial term, the Company is still mining the leased property under a valid permit, the Company can automatically extend the lease for an additional five years.

NOTE 6 – OTHER ASSETS

Investment in unconsolidated subsidiary

As of September 30, 2011, the Company owns 250,000 shares of Proton Power, Inc., and subsidiaries (“Proton”) that it acquired for $250,000. The 250,000 shares represent approximately 2.2% of the total outstanding shares of Proton. Proton is located in Lenoir City, Tennessee and is in the process of developing hydrogen based power systems that it will manufacture and sale to business customers with access to cellulosic biomass or cellulosic waste streams such as woody waste, agricultural by-products, and paper waste.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

Proton is privately held and the Company is accounting for its $250,000 investment under the cost method pursuant to ACS 325-20 “Cost Method Investment”. As of September 30, 2011, the Company has not evaluated its investment in Proton for impairment.

Investment in certificate of deposits

On March 31, 2010, the Company acquired $1,580,508 in certificates of deposits in connection with its acquisition of Evans Coal Corp., which are offset against an assumed liability to the former president of Evans in the amount of $1,198,685. The certificates of deposit are pledged as collateral for future reclamation costs attributable to the mining permits acquired through the aforementioned acquisition. From the date of the modified purchase agreement of Evans, all interest earned on the certificate of deposits is being distributed to the seller. During the year ended March 31 2011, the Company increased its investment in certificates of deposits by $13,602. The new certificates are also pledged as collateral for mining permits. The balance of the investments at September 30, 2011 totaled $1,594,110.

NOTE 7 – OBLIGATIONS UNDER CAPITAL LEASE

The Company is leasing two Ford F150 trucks under capital leases. The assets and related obligations have been recorded at the present value of the minimum lease payments. The capitalized costs of the trucks are $49,439, which is being depreciated over their estimated useful lives of 3 years. The leases are payable in payments of $3,883 per quarter. The imputed interest rate on the capital leases is 6%. The discounted balance due on the leases at September 30, 2011 totaled $25,154. The net book of the value of these leased trucks as of September 30, 2011 amounted to $21,381, which is net of accumulated depreciation of $28,058.

Minimum future lease payments under the capital lease at September 30, 2011 and for each year of the lease are as follows:

2012	$	17,456
2013		7,694
2014		3,790
Total minimum future lease payments		28,940
Less: amount representing interest		(3,786	)

Present value of minimum
Future lease payments	$	25,154

Imputed interest charged to operations on these leases for the three months ended September 30, 2011 and 2010 totaled $442 and $766, respectively. Imputed interest charged to operations on these leases for the six months ended September 30, 2011 and 2010 totaled $919 and $2,123, respectively. Depreciation expense on the leased trucks for the three months ended September 30, 2011 and 2010 totaled $4,120 and $4,120, respectively. Depreciation expense on the leased trucks for the six months ended September 30, 2011 and 2010 totaled $8,240 and $8,240, respectively. Depreciation is included in accretion, depreciation, and depletion expense in the accompanying consolidated statement of operations.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 8 – NOTES AND LOANS PAYABLE

Evans Coal Corp.

On March 31, 2010, the Company finalized its acquisition of all of the outstanding shares of Evans Coal Corp (“Evans”). Pursuant to the terms of the purchase, the Company issued a $25,000,000 promissory note payable initially in consecutive monthly payments at the rate of ($5.00) Dollars per short ton of coal mined, sold and shipped by the Company with the first payment being due in April 2010. Commencing in March 2011, the Company was required to make monthly payments of the greater of $5.00 per short ton or a minimum quarterly payment of $500,000 through maturity. Further, Evans has stipulated in the agreement that in the event the Company was unable to obtain all coal mining regulatory permits on the leasehold area known as the Breathitt County Project by December 31, 2016, then the note shall be reduced in principal by $5,000,000. The assets acquired from Evan’s have been pledged as collateral on this obligation. Based on the terms of the Note, the face value of $25,000,000 was inclusive of imputed simple interest at the applicable Federal Rate of 4.37%. In accordance with ASC 835, the Company present valued the obligation utilizing a fair market rate of 6.34% to $18,974,900.

As part of the aforementioned Acquisition Agreement, the Company assumed a note payable to the former President of Evan’s in the amount of $1,198,685. The note is non-interest bearing and due on demand.

The terms of the acquisition were modified effective September 28, 2010, and the $25,000,000 note was canceled. Imputed interest charged to operation during the three months and six months ended September 30, 2010, totaled $298,467 and $599,494, respectively, which was charged to operations. During the e six months ended September 30, 2010, the Company paid $38,540 on the note based upon production.

Bledsoe Acquisition – Related party

On July 27, 2009, the Company entered into an Assignment of Mineral Lease with RJCC#1 (“RJCC”), a Tennessee Partnership whereby RJCC agreed to assign their interest in mineral leases located in Bledsoe County Tennessee in exchange for $1,250,000. Pursuant to the terms of the agreement, $25,000 was paid upon the execution of the Agreement and the remaining balance was payable in 49 monthly installments of $25,000 each beginning on January 1, 2010. As the terms of the Agreement did not provide for interest on the installments, in accordance with ASC Topic 835, the Company imputed interest using an effective annual interest rate of 6% and discounted the balance due to $1,086,801.

On October 25, 2010, the Company agreed to issue 5,000,000 shares of its common stock valued at $2,300,000 to RJCC, a related party, in exchange for cancelling the remaining obligation of $1,168,163, inclusive of accrued imputed interest. Imputed interest charged to operations for the three and six months ended September 30 2010 totaled $121,540 and $136,617, respectively. RJCC is owned by family members of management.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

Term Loan

On December 29, 2010, $300,039 due a vendor for equipment maintenance and acquisitions was converted into a line of credit with an available limit of $325,000. The line of credit, is assessed interest at an annual rate of 11.25% and is payable in monthly installments of $14,188 until the balance and accrued interest are fully paid. As of September 30, 2011, the Company had available credit of $105,589 and an outstanding balance on this line of credit of $194,450. Interest charged to operations during the three and six months ended September 30, 2011 totaled $8,019 and $13,034, respectively.

Mortgage Payable

On May 10, 2010, the Company acquired a commercial building where its corporate offices are now located. The property was purchased for $975,000 and included a down payment of $20,956. The remaining balance of $962,763 is assessed interest at an annual rate of 6% and is payable in 60 monthly installments of $6,985 commencing August 10, 2010. Per the terms of the note, the Company made an additional payment of $63,015 for the reduction of principal. The unamortized principal balance and accrued interest of approximately $744,385 will be fully due and payable on April 10, 2015. Interest charged to operations on this obligation for the three months and ended September 30, 2011 and 2010 amounted to $13,229 and $12,212, respectively. Interest charged to operations on this obligation for the six months and ended September 30, 2011 and 2010 amounted to $26,573 and $20,930, respectively The balance of the note at September 30, 2011 totaled $868,967.

The following are maturities of long-term debt for each of the next five years

September 30,
2012	$	32,101
2013		34,099
2014		36,221
2015		766,546
Total		868,968
Less current portion		(32,101	)
	$	836,867

Loans Payable – Related Party

During the year ended March 31, 2011, the Company borrowed a total of $70,000 from an officer. The loans were assessed interest at a rate of 8%, was unsecured, and due on demand. In May 2011, $50,000 was repaid. The Officer advanced the Company an additional $30,000 in August 2011. On September 1, 2011, the $50,000 due was converted into a promissory note bearing interest at an annual rate of 12% and is secured by the Possum Hollow coal leased acquired in August 2011 as discussed in Note 5 above The note is payable monthly installment of interest only with the first payment due on October 1, 2011.The principal balance and any remaining accrued interest is fully due and payable on March 1, 2012. The balance of the loan at September 30, 2011 including accrued interest is $50,500. Interest charged to operations on these obligations for the three months ended September 30, 2011 and 2010 were $900 and $0, respectively. Interest charged to operations on these obligations for the six months ended September 30, 2011 and 2010 were $1,717 and $0, respectively.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

In September 2011, the same officer advanced the Company an additional $15,000 which is unsecured, non-interest bearing, and due upon demand.

NOTE 9 – CONVERTIBLE NOTES PAYABLE

On April 20, 2011, the Company entered into an investment agreement with Hanhong (Hong Kong) New Energy Holdings Limited (“Hanhong”) whereby Hanhong will lend up to $2,000,000 to the Company as evidenced by a convertible line of credit note. Amounts borrowed on the credit line are assessed interest at a rate of 16.66%. The outstanding principal and accrued interest is payable in monthly installments equal to $3.00 per ton of coal sold and shipped in the previous month. Unless earlier converted into common shares, the outstanding principal and accrued interest shall be fully due and payable on October 12, 2012. Advances on the credit line are available through October 31, 2011. Prior to maturity date, Hanghong can choose to convert from time to time, up to, but to not exceed, $2,000,000 of any accrued but unpaid interest or principal then outstanding into shares of the Company's common stock at a conversion price of $0.136815 per share, The note is secured by all of the assets of the Company with the exception of the certificates of deposits totaling $1,594,110 that have been pledged against reclamation bonds. During the six months ended September 30, 2011, the Company received a total of $1,500,000 in advances under the credit note.

Under the terms of the investment agreement, the Company granted Hanhong warrants to purchase up to 2,000,000 shares of the Company’s common stock at an exercise price of $0.14 per share, warrants to purchase up to 2,000,000 shares of the Company’s common stock at an exercise price of $0.20 per share, and warrants to purchase up to 2,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share.

Pursuant to ASC Topic 470-20, “Debt with Conversion and Other Options,” the convertible notes were recorded net of discounts totaling of $813,499 including the relative fair value of the warrants. The discounts are amortized and charged to operations over the life of the debt using the effective interest method. The value of the warrants of $362,700 was calculated using the Black Scholes Option Model with a risk free interest rate of .69%, volatility of 152.75%, and trading price of $0.17 per share. The balance of the convertible debt at September 30, 2011 including accrued interest, net discount of $653,708, was $846,292.

Interest charged to operations on the principal balance of the notes for the three and six months ended September 30, 2011 totaled $57,283 and $78,051, respectively. Amortization of the discount that was charged to operations during the three and six months ended September 30, 2011 was $112,899 and $159,791.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 10 – ASSET RETIREMENT OBLIGATION

As of September 30, 2011, the Company had recorded asset retirement obligation accruals for mine reclamation and closure costs totaling $1,355,842. These regulatory obligations are secured by certificates of deposit.

Changes in the asset retirement obligations from continuing operations were as follows:

Total asset retirement obligation – April 1, 2011	$	1,339,574
Accretion for the period		60,491
Less liabilities settled		(363,280	)
Total asset retirement obligations at September 30, 2011	$	1,036,785
Less current portion		-0-
Long-term portion	$	1,036,785

NOTE 11 - OTHER NON-CURRENT LIABILITIES

Accrued Royalty

The Company is obligated to pay a royalty to the former shareholders of Evans under the modified terms of the acquisition agreement. The royalty obligation is to be paid at a rate of $2 per ton on all coal produced from the leases acquired from Evans, excluding the Cardinal lease on which a royalty of $1 per ton will be paid. The fair value of the royalty obligation was discounted to its estimated present value. The balance at September 30, 2011 including accretion of accrued net royalties was $7,443,430. Included in the September 30, 2011 balance are royalties that accrued during the six months ended of $167,500 net payment of $15,391 made during the six month period.

Accrued officers’ severance pay

On June 1, 2011, the Company entered into new employment agreements with three of its officers. Under the terms of the employment agreements, the Company agreed to pay each officer $2,000,000 in the event of termination by the Company for cause, without cause, or in the event the employee resigns for good reason. The Company valued the liability at June 1, 2011 by discounting the $6,000,000 total amount due over the five-year term of the contracts using a discount rate of 5%.

In addition, the employment contracts also provide compensation after death or disability. In the event of death or a debilitating disability while the employee is under contract, the Company is required to the respective officer or his legal representative, the employee’s base salary for the next two years in monthly installments, starting from the month after death or disability. Each of the three contracting officer’s annual salary is $120,000. Therefore in the event of death or disability, the Company would be required to pay $240,000 in equal monthly payments over 24 months. As the officers covered by the clause are of varying ages, the probability of death based on statistical averages is somewhat different per employee. Using a probability table, the Company determined that the fair value of its obligation for death and disability at June 1, 2011 was $3,658.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

The present value of the total indicated liabilities of $6,003,658 at June 1, 2011 was $4,712,132 that was recorded as a liability with the offset being charged to operations as officers’ compensation. The liabilities accrete to their present value each period. During the three and six months ended September 30, 2011, the liabilities were increased by $115,999 and $155,694, respectively which was charged to operations and included in officers’ compensation. The balance of the obligation at September 30, 2011 totaled $4,867,826.

Derivative and warrant Liabilities

At September 30, 2011 (“the valuation date”), the Company recognized derivative and warrant liabilities and a correlating charge to operations in the amount of $311,600 pursuant to ASC 815-40-19 “Contracts in Entity's Own Equity” as the number of Company’s potential common shares and the number of actual common shares outstanding at the valuation date exceeded the number of common shares it currently is authorized to issue. The shortage in the number of committed shares over the number of authorized but unissued common shares at the valuation date totaled 15,397,179.

The total liabilities of $311,600 at the valuation date are based upon the fair value of the 15,000,000 granted warrants using the Black Scholes Option Model. The conversion feature of the convertible debt was not included in the September 30, 2011 derivative obligation as its conversion price per share was higher than the trading price of the Company’s common stock at the valuation date.

NOTE 12 – FAIR VALUE OF ASSETS AND LIABILITIES

Determination of Fair Value

The Company’s financial instruments consist of notes payable and loans payable. The Company believes all of the financial instruments’ recorded values approximate their fair values because of their nature and respective durations.

The Company complies with the provisions of ASC No. 820-10 (ASC 820-10), “Fair Value Measurements and Disclosures.” ASC 820-10 relates to financial assets and financial liabilities. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.

ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

Level 1. Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3. Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.

Application of Valuation Hierarchy

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following is a description of the valuation methodology used to measure fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Notes Payable. The Company assessed that the fair value of these liabilities to approximate its carrying value based on the effective yields of similar obligations.

Loans Payable - Other. The Company assessed that the fair value of this liability approximates its carrying value due to its short-term nature.

The methodology described above may produce a current fair value calculation that may not be indicative of net realizable value or reflective of future fair values. If readily determined market values became available or if actual performance were to vary appreciably from assumptions used, assumptions may need to be adjusted, which could result in material differences from the recorded carrying amounts. The Company believes its method of determining fair value is appropriate and consistent with other market participants. However, the use of different methodologies or different assumptions to value certain financial instruments could result in a different estimate of fair value.

The following table presents the fair value of financial instruments that are measured and recognized on a non-recurring basis classified under the appropriate level of the valuation hierarchy described above, as of September 30, 2011:

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

Liabilities measured at fair value at September 30, 2011	Level 1		Level 2		Level 3		Total
Nonrecurring:
Line of credit	$	-0-	$	194,450	$	-0-	$	194,450
Notes payable	$	-0-	$	919,468	$	-0-	$	919,468
Convertible debt	$	-0-	$	1,578,051	$	-0-	$	1,578,051
Loans payable - other	$	-0-	$	1,198,685	$	-0-	$	1,198,685
Derivative and warrant liabilities	$	-0-	$	311,600	$	-0-	$	311,600

NOTE 13 – STOCKHOLDERS EQUITY

Common share issuances

On July 1 2011, the Company issued 1,000,000 shares of its common stock to its chief financial officer as compensation valued at $180,000.

Warrants

The following is a schedule of warrants outstanding:

	Warrants Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Life	Aggregate Intrinsic Value
Balance, March 31, 2011		9,000,000	$	0.75	2.75 Years	$	-
Warrants granted		6,000,000		0.20	1.75 Years		-
Warrants expired		-		-			-
Balance, September 30, 2011		15,000,000	$	0.62	2.25 Years	$	-

All the warrants are available for exercise at September 30, 2011.

NOTE 14 – INCOME TAXES

At September 30, 2011, the Company has a net operating loss carryover of approximately $7,300,000 available to offset future income for income tax reporting purposes, which will expire in various years through 2031, if not previously utilized. However, the Company’s ability to use the carryover net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382.

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AMERICAS ENERGY COMPANY- AECo.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

We adopted the provisions of FIN 48, “Accounting for Uncertainty in Income Taxes.” We had no material unrecognized income tax assets or liabilities for the three months ended September 30, 2011.

Our policy regarding interest and penalties assessed on income tax is to expense those items as general and administrative expense. During the three and six months ended September 30, 2011 and 2010, there were no income tax interest and penalty items in the income statement, or as a liability on the balance sheet. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are no longer subject to U.S. federal or state income tax examination by tax authorities for years before 2004. We are not currently involved in any income tax examinations.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Liabilities for loss contingencies, arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated.

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

The following Management's Discussion and Analysis should be read in conjunction with Americas Energy Company-AECo (the “Company”, “we”, “us” or “our”) financial statements and the related notes thereto. The Management's Discussion and Analysis may contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company’s actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report on Form 10-Q.

The following discussion should be read in conjunction with our unaudited financial statements and related notes and other financial data included elsewhere in this report.

Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The reported financial results and disclosures were determined using the significant accounting policies, practices and estimates described below.

Revenue Recognition – Revenues include sales to customers of Company-produced coal and oil. The Company recognizes revenue when title or risk of loss passes to the common carrier or customer.

Asset Retirement Obligations –The Surface Mining Control and Reclamation Act of 1977 and similar state statutes require mine properties to be restored in accordance with specified standards. Accounting Standards Codification (“ASC”) Topic 410-20 requires recognition of an asset retirement obligation (“ARO”) for eventual reclamation of disturbed acreage remaining after mining has been completed. The Company records its reclamation obligations on a permit-by-permit basis using requirements as determined by the Office of Surface Mining of the U.S. Department of the Interior (“OSM”). The liability is calculated based upon the reclamation activities remaining after coal removal ceases, assuming that reclamation activities have been contemporaneous within state and federal guidelines during mining. A liability is recorded for the estimated future cost that a third party would incur to perform the required reclamation and mine closure discounted at the Company’s credit-adjusted risk-free rate. A corresponding increase in the asset carrying value of mineral rights is also recorded. The ARO asset is amortized on the units-of-production method over the proven and probable reserves associated with that permit. These expenses are included in depreciation, depletion, amortization, and accretion in the operating expenses section of the statement of operations.

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Financial Instruments – Financial instruments consist of cash, accounts receivable, accounts payable, notes payable and advances payable. Recorded values of cash, receivables, and accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments. Recorded values for notes payable and related liabilities approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations.

Financial Condition and Results of Operations

The following should be read in conjunction with our Consolidated Financial Statements and related Notes thereto included elsewhere in this Annual Report on Form 10-K.

Results of Operations

Three-Months Ended September 30, 2011 Compared to the Three-Months Ended September 30, 2010

During the three-months ended September 30, 2011, we have generated $114,804 in total revenue compared to our total sales during the three-month period ended September 30, 2010 of $2,147,843. In both years our revenue comprised primarily from sales of coal The total coal production sold during the three months ended September 30, 2011 was 3,163 tons as compared to 32,005 tons ((excluding brokered coal) sold in the same period in the prior year. During the three months ended September 30, 2011 our focus was on reclaiming previously mined properties. Production commenced again in November 2011.

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The following table presents the Company’s consolidated revenues and operating results for the three-months ended September 30, 2011 and 2010:

	Three-Months Ended
	September 30,						Increase(Decrease)
	2011			2010			$			%
REVENUES
Coal sales and related income	$	114,804		$	2,142,717		$	(2,027,913	)	(95	%)
Other income		-			5,126			(5,126	)	(100	%)
Total revenues		114,804			2,147,843			(2,033,039	)	(95	%)

OPERATING EXPENSES
Cost of sales (exclusive of accretion,
depreciation and depletion)		174,649			2,822,227			(2,647,578	)	(94	%)
Accretion, depreciation and depletion		194,982			277,510			(82,528	)	(30	%)
Compensation expense		600,577			962,766			(362,189	)	(38	%)
Professional fees		89,859			189,048			(99,189	)	(52	%)
General and administrative expenses		78,465			74,925			3,540		5	%
Total operating expenses		1,138,532			4,326,476			(3,187,944	)	(74	%)
Loss from operations		(1,023,728	)		(2,178,633	)		1,154,905		(53	%)
OTHER INCOME (EXPENSES)
Interest income		3,340			8,854			(5,514	)	(62	%)
Interest expense		(196,077	)		(501,129	)		305,052		(61	%)
Gain on disposition of asset		-			4,272			(4,272	)	100	%
Change in fair value of derivative and warrant liabilities		155,496			-			155,496		(100	%)
Net gain on modification of acquisition					12,763,252			(12,763,252	)	(100	%)
Total other income (expenses)		(37,241	)		12,275,249			(12,312,490	)	(100	%)

INCOME (LOSS) BEFORE INCOME TAXES	$	(1,060,969	)	$	10,096,616		$	(11,157,585	)	(111	%)

The net loss of $1,060,696 that we incurred during the three months ended September 30, 2011 included compensation expense of $600,577 and a gain of $155,496 from changes in the fair value of our derivative and warrant liabilities. Of the $600,577 in compensation expense, $180,000 relates to the fair value of the issuance of 1,000,000 shares of the Company’s common stock to a director, and $155,693 relates to the accretion in the present value of the severance pay that the Company is obligated under its employment agreement with three of its officers (See Note 11 to the accompanying unaudited financial statements). Excluding the cost of our stock based compensation, officers’ severance pay accrual, and the gain in the fair value of our derivative and warrant liabilities, our loss for September 30, 2011 would have been $880,772. Our derivative and warrant obligations are due to the number of potential common shares that we are committed to issue under our warrant grants and convertible debt added to the number of actual common shares outstanding at September 30, 2011 that exceed the number of common shares we currently are authorized to issue (See Note 11 to the accompanying unaudited financial statements).

Our net income of $10,096,616 for the three months period ended September 30, 2010 was primarily caused by the net gain of $12,763,252 that we recognized on the modification of the terms on our Evan’s acquisition. Our compensation expense for the same period of $962,766 included the fair value of 1,176,745 shares of our common stock that we issued to employees, officers, and directors during the three month period totaling $724,138. Excluding the stock based compensation and our net gain, we actually would have had a loss for the three months ended September 30, 2010 of $1,942,498.

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Interest expense for the three months ended September 30, 2011 of $196,077 includes $112,899 of amortization on the discount pertaining to our convertible debt with Hanhong New Energy Holdings, and $57,283 of accrued interest on the related $1,500,000 principal owed of the convertible debt (See Note 9 to the accompanying unaudited financial statements).

Interest expense for the three months ended September 30, 2010 of $501,129 included imputed interest of $300,525 on our then $25,000,000 obligation due to the Evans family on our purchase of Evans Coal Company and $121,540 of accrued interest on our obligation due on our purchase of the Bledsoe lease from a related party. We were relieved of our $25,000,000 obligation that was due Evans in September 2010.

Six -Months Ended September 30, 2011 Compared to the Six-Months Ended September 30, 2010

During the six-months ended September 30, 2011, we have generated $256,706 in total revenue compared to our total sales during the six-month period ended September 30, 2010 of $5,779,144. In both years our revenue comprised primarily from sales of coal The total coal production sold during the six-months ended September 30, 2011 was 5,100 tons as compared to 57,866 tons ((excluding brokered coal) sold in the same period in the prior year. As indicated, the decrease in revenue for the period ended September 30, 2011 as compared to the same period in the prior year was due to our required shift from production to reclamation as ordered by the State of Kentucky, Office of Surface Mining.

The following table presents the Company’s consolidated revenues and operating results for the six-months ended September 30, 2011 and 2010:

	Six-Months Ended
	September 30,						Increase(Decrease)
	2011			2010			$			%
REVENUES
Coal sales and related income	$	250,910		$	5,758,537		$	(5,507,627	)	(96	%)
Other income		5,796			20,607			(14,811	)	(72	%)
Total revenues		256,706			5,779,144			(5,522,438	)	(96	%)

OPERATING EXPENSES
Cost of sales (exclusive of accretion,
depreciation and depletion)		443,141			6,017,774			(5,574,633	)	(92	%)
Accretion, depreciation and depletion		387,331			439,176			(51,845	)	(12	%)
Compensation expense		7,193,270			4,024,452			3,168,818		(79	%)
Professional fees		282,207			278,395			3,812		(1	%)
General and administrative expenses		164,839			257,370			(92,531	)	(36	%)
Total operating expenses		8,470,788			11,017,167			(2,546,379	)	(23	%)
Loss from operations		(8,214,082	)		(5,238,023	)		(2,976,056	)	(57	%)
OTHER INCOME (EXPENSES)
Interest income		8,782			17,937			(9,155	)	(51	%)
Interest expense		(287,248	)		(854,635	)		567,187		(66	%)
Gain on disposition of asset		6,798			4,272			2,526		59	%
Change in fair value of derivativeand warrant liabilities		(311,600	)		-			(311,600	)	(100	%)
Net gain on modification of acquisition		-			12,763,252			(12,763,252	)	(100	%)
Total other income (expenses)		(583,268	)		11,930,826			(12,514,094	)	(105	%)

INCOME (LOSS) BEFORE INCOME TAXES	$	(8,797,350	)	$	6,692,803		$	(15,490,151	)	(231	%)

The net loss of $8,797,350 that we incurred during the six months ended September 30, 2011 included compensation expense of $7,193,270 and a loss of $311,600 from changes in the fair value of our derivative and warrant liabilities. Of the $7,193,270 in compensation expense, $1,900,583 relates to the fair value of the issuance of 7,243,388 shares of the Company’s common stock to employees officers, and directors, and $4,867,826 relates to the accretion in the present value of the severance pay that the Company is obligated under its employment agreement with three of its officers (See Note 11 to the accompanying unaudited financial statements). Excluding our stock based compensation, officers’ severance pay accrual, and change in the fair value of our derivative and warrant liabilities, our loss for the six month period ended September 30, 2011 would have been $(1,717,341). Our derivative and warrant obligations are due to the number of potential common shares that we are committed to issue under our warrant grants and convertible debt added to the number of actual common shares outstanding at September 30, 2011 that exceed the number of common shares we currently are authorized to issue (See Note 11 to the accompanying unaudited financial statements).

Our net income of $6,692,803 for the six month period ended September 30, 2010 was primarily caused by the net gain of $12,763,252 that we recognized on the modification of the terms on our Evan’s acquisition. Our compensation expense for the same period of $4,024,452 included the fair value of 2,461,745 shares of our common stock that we issued to employee, officers, and employees during the six month period totaling $3,488,638. Excluding the stock based compensation and our net gain; we actually would have had a loss for the six months ended September 30, 2010 of $(2,581,811).

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Interest expense for the six months ended September 30, 2011 of $287,248 includes is $159,791 of amortization on the discount pertaining to our convertible debt with Hanhong New Energy Holdings, and $78,051of accrued interest on the related $1,500,000 principal owed of the convertible debt (See Note 9 to the accompanying unaudited financial statements).

Interest expense for the six months ended September 30, 2010 of $854,635 included imputed interest of $599,494 on our then $25,000,000 obligation due to the Evans family on our purchase of Evans Coal Company and $136,617 of accrued interest on our obligation due on our purchase of the Bledsoe lease from a related party. We were relieved of our $25,000,000 obligation due Evans in September 2010.

Liquidity and Capital Resources

During the fiscal six-months ended September 30, 2011, net cash used by operating activities totaled $834,961. Net cash used in investing activities totaled $563,145 of which $653,145 was paid in the development of mineral properties and $10,000 was incurred in the purchase of equipment used in our operations. Our total investment expenditures of $663,145 were subsidized by the $100,000 we received from the sale of our oil properties to RJCC Group I (a related party). Financing activities provided during the six months totaled $1,389,375 of which the $1,500,000 advance we received during the six month period from Hanhong and $45,000 received in advances from an officer. Financing activities used during the six month period included $50,000 in payments made against the debt we owed to the indicated officer, $6,849 in principal payments on a capital lease obligations, $86,281 in principal payments on our credit line and $12,495 in principal payments on notes payable. The resulting change in cash for the period was a decrease of $8,737. The cash balance at the beginning of the fiscal six-months was $10,622. The cash balance at September 30, 2011 was $1,885, which is insufficient to fund future operations.

For the six month period ended September 30, 2010, net cash provided by our operating activities totaled $166,423. Net cash used in investing activities totaled $955,209, which included $179,345 to purchase equipment used in our operations, $47,599 in building improvements, $10,000 in repayments on related party debt, $265,000 in investments in a privately held company, and $453,265 was paid in the development of our mining properties Financing activities provided a total of $551,533, which included $500,000 in proceeds from a note payable, $100,000 in proceeds from convertible note, less $5,763 in principal payments on a capital lease obligations, $28,708 in payments towards our accrued royalty due on the Evan’s purchase, and $13,996 in principal payments on notes payable. The resulting change in cash for the period was a decrease of $237,253; Cash at the beginning of the period totaled $542,331, the decrease resulted in our cash balance of $305,078 at September 30, 2010.

Critical components of our operating plan impacting our continued existence are the net revenue generated from the production and sale of coal and the ability to obtain additional capital through additional equity and/or debt financing.

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Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Based upon current operating levels and obligations, we may require additional capital to sustain our operations for the foreseeable future. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability.

Operations Summary

Our mining operations during the majority of the three month period covered by this report on Form 10Q were suspended pending the satisfactory completion of certain reclamation work by order of the State of Kentucky, Office of Surface Mining. As of the date of this report we have cleared the suspension order and resumed surface mining on the Artemus Property in the Lily and Jellico seams. Our focus is on putting the Jellico deep mine into production. We plan to follow on with deep mines in Kellioka and Darby seams on our Cardinal property and finally a deep mine in our Lily seam. All of these deep mines are permitted and bonded.

Until recently we utilized contract miners for all of our mining operations. We have now begun to mine utilizing our own employees and equipment. We believe that on a going forward basis this decision will give us more control over operations to improve profitability. We expect that direct control over the operation and maintenance of our equipment will provide opportunities to reduce costs and improve reliability. The result is expected to help us avoid any future costly delays as encountered this period due to the issues with timely reclamation.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements or financing activities with special purpose entities.

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Item 3 - Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4 - Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report.

Based on that evaluation, the Company’s management including the principal executive officer and principal financial officer, concluded that the Company’s disclosure controls and procedures were not effective in providing reasonable assurance that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act was recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms because there exist material weaknesses affecting our internal control over financial reporting described in our annual report for the year ended March 31, 2011 on Form 10-K.

Due to the present scale of our operations and limited financial resources, we do not intend to take any action to remediate the material weaknesses identified beyond those actions already identified in our Annual report for the year ended March 31, 2011.

Changes in Internal Controls over Financial Reporting

During the period covered by this report, there was no change in our internal controls over financial reporting or in other factors that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

No legal proceedings were initiated or served upon the Company in the three month period ending September 30, 2011.

A Notice of Proposed Assessment was sent to the Company on August 22, 2011 by the Division of Mine Reclamation and Enforcement of the State of Kentucky regarding a proposed penalty assessment in the contingent amount of $108,500. The proposed assessment of the penalty relates to work that was to have been performed by Black Diamond Energy, Inc., that purportedly has been found deficient by the Division of Mine Reclamation and Enforcement. Black Diamond Energy, Inc. has been notified of a proposed penalty assessment in the amount of $81,000.00 for the same alleged non-compliance. The Company plans on 1) requesting an assessment conference to contest the proposed assessment, and 2) take legal action against Black Diamond Energy, Inc., for any penalties assessed against the Company that were caused by Black Diamond Energy, Inc.

The Company is of the opinion that most, if not all, of the alleged non-compliance can be directly attributed to the failure(s) of Black Diamond Energy, Inc., to perform its work according to industry standards.

From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims, other than those disclosed above, are pending against or involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on its business and financial condition.

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

No disclosure required.

Item 3 - Defaults upon Senior Securities

No disclosure required.

Item 4 - (Removed and Reserved)

Item 5 - Other Information

No disclosure required.

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Item 6 - Exhibits

Americas Energy Company- AECo includes by reference the following exhibits:

	3.1	Articles of Incorporation (1)
	3.2	Bylaws (1)
	3.3	Amended Articles of Incorporation - Name Change to Americas Energy Company, filed October 14, 2009 (2)

	(1) Filed with the Registrant’s Registration Statement on Form 10SB, October 07, 2004
	(2) Filed with Registrant’s Current Report on Form 8K, January 27, 2010

Americas Energy Company- AECo includes herewith the following exhibits:

	31.1	Certification of Principal Executive Officer (Rule 13a-14(a)/15d-14(a))
	31.2	Certification of Principal Accounting Officer (Rule 13a-14(a)/15d-14(a))
	32.1	Certification of Principal Executive Officer (18 U.S.C. 1350)
	32.2	Certification of Principal Accounting Officer (18 U.S.C. 1350)

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Americas Energy Company

Date: November 14, 2011	By:	/s/ Christopher L. Headrick
		Christopher L. Headrick, President
		Principal Executive Officer


Date: November 14, 2011	By:	/s/ Hong Duan
		Hong Duan, CFO
		Principal Financial Officer

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